UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                               __________________

                                   FORM 10-Q/A

                                 Amendment No. 1

 [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                                  Act of 1934
                For the quarterly period ended September 30, 2004

     [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934
                  For the Transition period from ____ to ______

                        Commission File Number 001-16855

                            SCOTTISH RE GROUP LIMITED

             (Exact Name of Registrant as Specified in Its Charter)


             Cayman Islands                                98-0362785
    (State or Other Jurisdiction of                     (I.R.S. Employer
     Incorporation or Organization)                    Identification No.)

                                P.O. Box HM 2939
                            Crown House, Third Floor
                               4 Par-la-Ville Road
                                  Hamilton HM08
                                     Bermuda
                                                                  Not Applicable
                      (Address of Principal Executive Offices)      (Zip Code)

                                 (441) 295-4451

              (Registrant's telephone number, including area code)

              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No

As of November 1, 2004, Registrant had 35,905,962 ordinary shares outstanding.


<PAGE>


                            Scottish Re Group Limited
                         Quarterly Report on Form 10-Q/A

                                Explanatory Note


          This amendment on Form 10-Q/A amends the Company's Quarterly Report on
Form 10-Q for the three and nine month periods ended September 30, 2004 as
initially filed with the Securities and Exchange Commission (the "SEC") on
November 8, 2004 and is being filed to reflect the restatement of the Company's
consolidated financial statements for the three and nine month periods ended
September 30, 2004, as discussed in Note 17 to the Company's consolidated
financial statements.

          During the fourth quarter of 2004, Scottish Re Group Limited (the
"Company") determined that its International Segment had incorrectly reported
premiums earned, claims and other policy benefits, acquisition costs and other
insurance expenses and related income tax benefits in the quarters ended June
30, 2004 and September 30, 2004. The effect of these errors was to understate
net income by $1.1 million, or $0.03 per diluted share, in the three months
ended June 30, 2004, to overstate net income by $1.2 million, or $0.03 per
diluted share, in the three months ended September 30, 2004, to overstate net
income by $112,000 in the nine month period ended September 30, 2004 and to
overstate shareholders' equity by $112,000 at September 30, 2004.

          The errors were made in the process of compiling income statement
information on the accrual of premiums and resulted from incorrect references
within the spreadsheets used to calculate these accruals. As a result, incorrect
information was referenced to prepare the journal entries used in updating the
general ledger for the International Segment. The errors were detected by
management as part of their ongoing documentation and testing of internal
controls over financial reporting for Sarbanes Oxley Section 404 reporting.

          Management has taken a series of steps in its ongoing review of
internal controls over financial reporting to improve control processes,
including those involving the compilation of information used in reporting
premium accruals, and to avoid similar errors going forward. Management has also
taken steps to improve controls around segregation of responsibilities and
review of manually prepared information and has strengthened procedures for the
reconciliation of all material general ledger balances.

          On December 30, 2004, the Company's Audit Committee determined it was
appropriate to amend the previously filed consolidated financial statements
contained in the Company's second and third quarter 2004 Form 10-Q to reflect
changes that correct these errors.

          This report on Form 10-Q/A for the quarter ended September 30, 2004
reflects restatements of the following financial statements:

          (a)  Unaudited consolidated balance sheet at September 30, 2004

          (b)  Unaudited consolidated statements of income for the three and
               nine months ended September 30, 2004

          (c)  Unaudited consolidated statements of comprehensive income for the
               three and nine months ended September 30, 2004


                                        i

<PAGE>


          (d)  Unaudited consolidated statement of shareholders' equity for the
               nine months ended September 30, 2004

          (e)  Unaudited consolidated statement of cash flows for the nine
               months ended September 30, 2004

For a more detailed description of the restatements see Note 17 "Restatement of
Unaudited Consolidated Financial Statements" to the accompanying notes to the
unaudited consolidated financial statements.

          This report on Form 10-Q/A restates certain financial information, for
the applicable periods set forth in the notes to the consolidated financial
statements, in Item 2, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Item 4 "Controls and Procedures".

          Other items included in this report of Form 10-Q/A are not affected by
the restatements.


                                       ii

<PAGE>


                                Table of Contents


PART I.  FINANCIAL INFORMATION.................................................4

Item 1.  Financial Statements..................................................4

        Consolidated Balance Sheets - September 30, 2004 (Unaudited)
        and December 31, 2003..................................................4

        Unaudited Consolidated Statements of Income - Three and Nine
        months ended September 30, 2004 and 2003...............................5

        Unaudited Consolidated Statements of Comprehensive Income -
        Three and Nine months ended September 30, 2004 and 2003................6

        Unaudited Consolidated Statements of Shareholders' Equity -
        Nine months ended September 30, 2004 and 2003..........................7

        Unaudited Consolidated Statements of Cash Flows - Nine months
        ended September 30, 2004 and 2003......................................8

        Notes to Unaudited Consolidated Financial Statements...................9

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations............................................29

Item 3.  Quantitative and Qualitative Disclosures About Market Risk...........59

Item 4.  Controls and Procedures..............................................59

PART II. OTHER INFORMATION....................................................61

Item 1.  Legal Proceedings....................................................61

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds..........61

Item 3.  Defaults Upon Senior Securities......................................61

Item 4.  Submission of Matters to a Vote of Securities Holders................61

Item 5.  Other Information....................................................61

Item 6.  Exhibits and Reports on Form 8-K.....................................62


                                       iii

<PAGE>


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

                            Scottish Re Group Limited
          Consolidated Balance Sheets - September 30, 2004 (Unaudited)
                              and December 31, 2003
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                             September 30,
                                                                 2004          December 31,
                                                              (unaudited)          2003
                                                            ---------------  ---------------
<S>                                                       <C>              <C>
ASSETS
Fixed maturity investments, available for sale, at fair
value (Amortized cost $2,766,389; 2003 - $1,993,247)...     $    2,797,450   $    2,014,719
Preferred stock, available for sale, at fair value
(Cost $124,663; 2003 - $125,460).......................            125,082          126,449
Cash and cash equivalents..............................            191,016          298,149
Other investments......................................             16,412           17,678
Funds withheld at interest.............................          1,477,870        1,469,425
                                                            ---------------  ---------------
    Total investments..................................          4,607,830        3,926,420
Accrued interest receivable............................             24,159           22,789
Reinsurance balances and risk fees receivable..........            288,377          196,192
Deferred acquisition costs.............................            411,880          308,591
Amount recoverable from reinsurers.....................            703,288          737,429
Present value of in-force business.....................             38,349           13,479
Goodwill...............................................             34,125           35,847
Fixed assets...........................................             12,242           11,800
Other assets...........................................             11,999           45,209
Current income tax receivable..........................             10,716                -
Deferred tax benefit...................................              9,623           12,624
Segregated assets......................................            740,220          743,137
                                                            ---------------  ---------------
    Total assets.......................................     $    6,892,808   $    6,053,517
                                                            ===============  ===============
LIABILITIES
Reserves for future policy benefits....................     $    1,602,348   $    1,502,415
Interest sensitive contract liabilities................          3,136,930        2,633,346
Structured finance facility liability..................            200,000                -
Accounts payable and accrued expenses..................             23,223           31,673
Reinsurance balances payable...........................             93,946          125,756
Other liabilities......................................             28,932           30,546
Current income tax payable.............................                  -           13,077
Long term debt.........................................            194,500          162,500
Segregated liabilities.................................            740,220          743,137
                                                            ---------------  ---------------
    Total liabilities..................................          6,020,099        5,242,450
                                                            ---------------  ---------------
MINORITY INTEREST                                                    9,535            9,295
MEZZANINE EQUITY                                                   142,296          141,928
SHAREHOLDERS' EQUITY
Share capital, par value $0.01 per ordinary share:
   Issued and fully paid: 35,905,962 ordinary shares
   (2003 - 35,228,411).................................                359              352
Additional paid-in capital.............................            556,173          548,750
Accumulated other comprehensive income.................             37,644           29,034
Retained earnings......................................            126,702           81,708
                                                            ---------------  ---------------
    Total shareholders' equity.........................            720,878          659,844
                                                            ---------------  ---------------
    Total liabilities and shareholders' equity.........     $    6,892,808   $    6,053,517
                                                            ===============  ===============
</TABLE>

      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                        4

<PAGE>


                            Scottish Re Group Limited
               Unaudited Consolidated Statements of Income - Three
                and Nine months ended September 30, 2004 and 2003
                  (Dollars in thousands, except per share data)


<TABLE>
<CAPTION>
                                           Three months ended            Nine months ended
                                       ---------------------------  ----------------------------
                                        September      September      September      September
                                         30, 2004      30, 2003       30, 2004       30, 2003
                                       ------------- -------------  -------------- -------------
<S>                                   <C>           <C>            <C>            <C>
REVENUES
Premiums earned......................  $    145,928  $     92,741   $    435,254   $    252,296
Investment income, net...............        55,519        38,133        160,439        106,272
Fee income...........................         2,545         2,932          8,686          7,303
Realized gains (losses)..............        (3,398)          744         (3,664)        (4,969)
Change in value of embedded
derivatives..........................        (5,509)            -            456              -
                                       ------------- -------------  -------------- -------------
    Total revenues...................       195,085       134,550        601,171        360,902
                                       ------------- -------------  -------------- -------------

BENEFITS AND EXPENSES
Claims and other policy benefits.....       104,701        69,424        322,856        177,886
Interest credited to interest
sensitive contract liabilities.......        27,685        33,294         77,342         66,061
Acquisition costs and other
insurance expenses, net..............        39,939        27,593        110,397         76,132
Operating expenses...................        13,214         8,753         36,969         24,767
Interest expense.....................         3,352         1,869          9,126          5,533
                                       ------------- -------------  -------------- -------------
    Total benefits and expenses......       188,891       140,933        556,690        350,379
                                       ------------- -------------  -------------- -------------
Income (loss) before income taxes
and minority interest................         6,194        (6,383)        44,481         10,523
Income tax benefit...................         5,401         8,165          6,217          7,999
                                       ------------- -------------  -------------- -------------
Income before minority interest......        11,595         1,782         50,698         18,522
Minority interest....................           (17)            -           (355)             -
                                       ------------- -------------  -------------- -------------
Income from continuing operations....        11,578         1,782         50,343         18,522
Loss from discontinued operations....             -          (157)             -         (1,782)
                                       ------------- -------------  -------------- -------------
Net income                             $     11,578  $      1,625   $     50,343   $      16,740
                                       ============= =============  ============== =============
Earnings per ordinary share from
continuing operations - Basic........  $       0.32  $        0.05  $       1.41   $        0.64
                                       ============= =============  ============== =============
Earnings per ordinary share from
continuing operations - Diluted......  $       0.31  $        0.05  $       1.35   $        0.60
                                       ============= =============  ============== =============
Earnings per ordinary share - Basic..  $       0.32  $        0.05  $       1.41   $        0.57
                                       ============= =============  ============== =============
Earnings per ordinary share - Diluted. $       0.31  $        0.05  $       1.35   $        0.55
                                       ============= =============  ============== =============
Dividends per ordinary share.........  $       0.05  $        0.05  $       0.15   $        0.15
                                       ============= =============  ============== =============

Weighted average number of ordinary
shares outstanding
Basic................................    35,869,413    33,248,670     35,648,913     29,119,913
                                       ============= =============  ============== =============
Diluted..............................    37,244,288    35,240,768     37,268,420     30,647,580
                                       ============= =============  ============== =============
</TABLE>


      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                        5

<PAGE>


                            Scottish Re Group Limited
           Unaudited Consolidated Statements of Comprehensive Income -
             Three and Nine months ended September 30, 2004 and 2003
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                            Three months ended               Nine months ended
                                      ----------------------------- -------------------------------
                                       September 30,  September 30,  September 30,   September 30,
                                           2004            2003          2004            2003
                                      -------------- -------------- --------------- ---------------
<S>                                  <C>           <C>            <C>             <C>
Net income.....................       $      11,578  $      1,625   $      50,343   $   16,740

Other comprehensive income,
net of tax:

    Unrealized appreciation
    (depreciation)
    on investments:............              40,756        (6,423)          8,582        18,142
    Add: reclassification
    adjustment for investment
    (losses) gains included in
    net income.................              (1,862)          475          (1,797)       (4,649)
                                      -------------- -------------- --------------- ---------------
Unrealized appreciation
(depreciation) on investments net of
income taxes of $12,519, $(3,364),
$2,515 and $3,466..............              38,894        (5,948)          6,785        13,493
Cumulative translation
adjustment.....................               1,888            21           1,825         2,042
Minimum pension liability
adjustment.....................                   -            (6)              -           (45)
                                      -------------- -------------- --------------- ---------------
Other comprehensive income
(loss).........................              40,782        (5,933)          8,610        15,490
                                      -------------- -------------- --------------- ---------------
Comprehensive income (loss)....        $     52,360  $     (4,308)  $      58,953   $    32,230
                                      ============== ============== =============== ===============
</TABLE>


      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                        6

<PAGE>


                            Scottish Re Group Limited
           Unaudited Consolidated Statements of Shareholders' Equity -
                  Nine months ended September 30, 2004 and 2003
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                  Nine months ended
                                                           --------------------------------
                                                           September 30,      September 30,
                                                               2004               2003
                                                           -------------     --------------
<S>                                                      <C>              <C>
ORDINARY SHARES:
    Beginning of period................................       35,228,411         26,927,456
    Ordinary shares issued.............................                -          9,200,000
    Ordinary shares repurchased........................                -         (1,525,000)
    Issuance to employees on exercise of options.......          677,551            381,955
    Issuance on exercise of warrants...................                -            200,000
                                                           -------------     --------------
    End of period......................................       35,905,962         35,184,411
                                                           =============     ==============
SHARE CAPITAL:
    Beginning of period................................    $         352      $        269
    Ordinary shares issued.............................                -                 92
    Ordinary shares repurchased........................                -                (15)
    Issuance to employees on exercise of options.......                7                  4
    Issuance on exercise of warrants...................                -                  2
                                                           -------------     --------------
    End of period......................................              359                352
                                                           -------------     --------------
ADDITIONAL PAID-IN CAPITAL:
    Beginning of period................................          548,750            416,712
    Ordinary shares issued.............................                -            180,105
    Ordinary shares repurchased........................                -            (29,966)
    Issuance to employees on exercise of options.......            7,246              4,187
    Issuance on exercise of warrants...................                -              2,998
    Warrants repurchased...............................                -             (1,600)
    Other..............................................              177                 -
                                                           -------------     --------------
    End of period......................................          556,173            572,436
                                                           -------------     --------------

ACCUMULATED OTHER COMPREHENSIVE INCOME:
Unrealized appreciation on investments
    Beginning of period................................           16,848              8,930
    Change in period (net of tax)......................            6,785             13,493
                                                           -------------     --------------
    End of period......................................           23,633             22,423
                                                           -------------     --------------

Cumulative translation adjustment
    Beginning of period................................           12,186              5,908
    Change in period...................................            1,825              2,042
                                                           -------------     --------------
    End of period......................................           14,011              7,950
                                                           -------------     --------------
Minimum pension liability adjustment
    Beginning of period................................                -             (1,371)
    Change in period...................................                -                (45)
                                                           -------------     --------------
    End of period......................................                -             (1,416)
                                                           -------------     --------------

ACCUMULATED OTHER COMPREHENSIVE INCOME ............               37,644             28,957
                                                           -------------     --------------

RETAINED EARNINGS:
    Beginning of period................................           81,708             60,644
    Net income.........................................           50,343             16,740
    Dividends paid.....................................           (5,349)            (4,457)
                                                           -------------     --------------
    End of period......................................          126,702             72,927
                                                           -------------     --------------
TOTAL SHAREHOLDERS' EQUITY.........................        $     720,878     $      674,672
                                                           =============     ==============
</TABLE>


      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                        7

<PAGE>


                            Scottish Re Group Limited
                Unaudited Consolidated Statements of Cash Flows -
                  Nine months ended September 30, 2004 and 2003
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                         Nine months ended
                                                                   -----------------------------
                                                                   September 30,   September 30,
                                                                        2004            2003
                                                                   -------------   -------------
<S>                                                              <C>             <C>
OPERATING ACTIVITIES
Net income......................................................   $     50,343    $     16,740
Items not affecting cash:.......................................
    Realized losses.............................................          3,664           4,969
    Change in value of embedded derivatives.....................           (456)              -
    Amortization of investments.................................          8,321           3,940
    Amortization of deferred acquisition costs..................         64,355          35,803
    Amortization of present value of in-force business..........          5,034           2,353
    Changes in assets and liabilities:..........................
        Accrued interest........................................         (1,302)         (5,485)
        Reinsurance balances and risk fees receivable...........       (149,139)         (5,210)
        Deferred acquisition costs..............................       (168,260)       (105,856)
        Deferred tax benefit....................................        (10,209)         (8,766)
        Other assets............................................            (59)          2,903
        Current income tax receivable and payable...............        (26,864)         (1,484)
        Reserves for future policy benefits.....................        169,615         118,301
        Interest sensitive contract liabilities, net of funds
        withheld at interest....................................         35,741          12,111
        Accounts payable and accrued expenses...................         (5,779)         (1,226)
        Other...................................................          6,636          (6,645)
                                                                   -------------   -------------
Net cash (used in) provided by operating activities.............        (18,359)         62,448
                                                                   -------------   -------------

INVESTING ACTIVITIES
Purchase of fixed maturity investments..........................     (1,538,634)       (968,551)
Proceeds from sales of fixed maturity investments...............        498,397         212,929
Proceeds from maturity of investments...........................        257,625         165,466
Purchase of preferred stock.....................................        (23,662)        (71,168)
Proceeds from sales of preferred stock..........................         18,605          17,803
Proceeds from maturity of preferred stock.......................          4,805           1,762
Other...........................................................            946               -
                                                                   -------------   -------------
Net cash used in investing activities...........................       (781,918)       (641,759)
                                                                   -------------   -------------

FINANCING ACTIVITIES
Issuance of long term debt......................................         32,000               -
Proceeds from collateral facility liability.....................        200,000               -
Deposits to interest sensitive contract liabilities.............        518,451         449,185
Withdrawals from interest sensitive contract liabilities........        (59,211)        (27,635)
Issuance of ordinary shares.....................................          7,253         187,230
Repurchase of ordinary shares...................................              -         (29,981)
Repurchase of warrants..........................................              -          (1,600)
Dividends paid..................................................         (5,349)         (4,457)
                                                                   -------------   -------------
Net cash provided by financing activities.......................        693,144         572,742
                                                                   -------------   -------------
Net change in cash and cash equivalents.........................       (107,133)         (6,569)
Cash and cash equivalents, beginning of period..................        298,149         149,666
                                                                   -------------   -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                           $    191,016    $    143,097
                                                                   =============   =============
</TABLE>


      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                        8

<PAGE>


                            Scottish Re Group Limited
              Notes to Unaudited Consolidated Financial Statements
                               September 30, 2004

1.   Basis of presentation

     Accounting Principles - The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles in the United States of America ("GAAP") and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The results for the period are not necessarily indicative of the
results to be expected for the entire year.

     Consolidation - We consolidate the results of all our subsidiaries and all
variable interest entities for which we are the primary beneficiary. All
significant intercompany transactions and balances have been eliminated on
consolidation.

     Estimates, risks and uncertainties - The preparation of consolidated
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported on the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates. Our most significant assumptions are for assumed reinsurance
liabilities and deferred acquisition costs. We review and revise these estimates
as appropriate. Any adjustments made to these estimates are reflected in the
period the estimates are revised.

     For further information, refer to the consolidated financial statements and
footnotes included in our Annual Report on Form 10-K for the period ended
December 31, 2003.

     All tabular amounts are reported in thousands of United States dollars
(except per share amounts).

     Certain prior period amounts have been reclassified to conform to the
current period presentation.

2.   New Accounting Pronouncements

     In July 2003, the Accounting Standards Executive Committee issued Statement
of Position 03-01 ("SOP"), "Accounting and Reporting by Insurance Enterprises
for Certain Nontraditional Long-Duration Insurance Contracts and for Separate
Accounts". This SOP provides guidance on accounting and reporting by insurance
enterprises for certain nontraditional long-duration contracts and for separate
accounts and is effective for financial statements for fiscal years beginning
after December 15, 2003. In implementing the SOP we have made various
determinations, such as qualification for separate account treatment,
classification of securities in separate account arrangements, significance of
mortality and morbidity risk, adjustments to contract holder liabilities, and
adjustments to estimated gross profits as defined in Statement of Financial
Accounting Standards ("SFAS") No. 97, "Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains and
Losses from the Sale of Investments". Implementation of this SOP has not had a
material effect on our financial statements.

     Effective December 31, 2003, we adopted the disclosure requirements of
Emerging Issues Task Force 03-1 ("EITF 03-1") "The Meaning of
Other-Than-Temporary Impairments and Its Application to Certain Investments".
This EITF provides guidance on disclosures for other than temporary impairments
of debt and marketable equity investments that have been accounted for under
SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities".
During the quarter ended


                                        9

<PAGE>


                            Scottish Re Group Limited
              Notes to Unaudited Consolidated Financial Statements
                               September 30, 2004


September 30, 2004 the effective date of the application of EITF 03-1 for debt
securities that are impaired because of interest rate and/or sector spread
increases was delayed pending issuance of further guidance.

     In January 2003, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation 46, "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51" ("FIN 46"). FIN 46 provides a framework for
identifying variable interest entities and determining when a company should
include its assets, liabilities, non-controlling interests and results of
activities in the consolidated financial statements. A variable interest entity
is a legal structure used to conduct activities or hold assets that either (1)
has an insufficient amount of equity to carry out its principal activities
without additional subordinated financial support, (2) has a group of equity
owners that are unable to make significant decisions about its activities, or
(3) has a group of equity owners that do not have the obligation to absorb
losses or the right to receive returns generated by its operations. FIN 46
requires a variable interest entity to be consolidated if a party with an
ownership, contractual or other financial interest in the variable interest
entity is obligated to absorb a majority of the risk of loss from the variable
interest entity's activities, is entitled to receive a majority of the variable
interest entity's residual returns, or both. A variable interest holder that
consolidates the variable interest entity is called the primary beneficiary. We
are the primary beneficiary of the structured finance facility discussed in note
12 and thus have consolidated the variable interest entity in accordance with
FIN 46. We hold no interests in unconsolidated variable interest entities.

     During the quarter ended September 30, 2004, EITF 04-8 "The Effect of
Contingently Convertible Debt on Diluted Earnings Per Share" was issued. EITF
04-8 requires that certain instruments with embedded conversion features that
are contingent upon market price triggers be included in diluted earnings per
share calculations regardless of whether the contingency has been met. Our 4.5%
senior convertible notes are convertible on the basis of a market price trigger.
On October 26, 2004 we amended the terms of these notes so that we are required
to settle the principal amount of $115.0 million in cash on conversion or
repurchase. As a result we shall continue to apply the treasury stock method in
calculating diluted earnings per share for amounts in excess of the principal of
$115.0 million.

3.   Business acquisitions

     On October 18, 2004, we announced that we had agreed to acquire the
individual life reinsurance business of ING Re. We will reinsure the liabilities
of all of ING Re's individual life reinsurance business through a coinsurance
transaction. ING Re will transfer to us assets equal to reserves of
approximately $800.0 million and will pay a ceding commission of $560.0 million.
These assets will be held in trust to secure the reserve obligations of the
business. Additionally, ING Re will transfer certain operating assets associated
with the business. Following the acquisition, we will have approximately $1.0
trillion of face amount of life reinsurance in-force, $8.8 billion in assets,
$2.1 billion in revenues.

     In addition to the assets to be transferred by ING Re, we will raise an
additional $230.0 million in new capital, which will satisfy the capital
requirements for the acquired business. This new capital includes $180.0 million
to be provided by The Cypress Group, a private equity firm, and an additional
$50.0 million of trust preferred securities.

     On December 22, 2003, we completed the acquisition of 95% of the
outstanding capital stock of ERC Life Reinsurance Corporation for $151.0 million
in cash, subject to certain post closing adjustments. During the quarter ended
September 30, 2004, we agreed and settled the post closing adjustment at $18.9
million, resulting in a final acquisition cost of $169.9 million. There was no
goodwill arising on the acquisition. The present value of in-force of the
business acquired was $29.9 million.


                                       10

<PAGE>


                            Scottish Re Group Limited
              Notes to Unaudited Consolidated Financial Statements
                               September 30, 2004


     ERC has requested a refund of $8.0 million in respect of a settlement of a
tax liability. We have disputed ERC's right to this refund. In the event that
ERC are successful in their request, the present value of in-force business
would increase to $37.8 million. On February 19, 2004, ERC Life Reinsurance
Corporation's name was changed to Scottish Re Life Corporation.

4.   Discontinued operations

     During 2003, we decided to discontinue our Wealth Management operations in
Luxembourg. We have transferred our Luxembourg Wealth Management business to
third parties, closed the Luxembourg office and are in the process of
liquidating our Luxembourg subsidiary. We have reported the results of the
Luxembourg Wealth Management activities as discontinued operations. During the
quarter ended September 30, 2003 losses from these operations amounted to
$157,000 and for the nine month period ended September 30, 2003, losses incurred
were $1.8 million. There has been no impact in 2004.

5.   Business segments

     We report segments in accordance with SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information". Our main lines of business
are Life Reinsurance North America and Life Reinsurance International, which we
identify as separate segments.


                                       11

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


5.   Business segments (continued)

     In prior years, we reported our Wealth Management business as a separate
segment. As this business is no longer a major contributor to our results, we
have combined the reporting of this segment with our Other Segment for all
periods presented. The segment reporting for the lines of business is as
follows:


<TABLE>
<CAPTION>
                                        Three months ended September 30, 2004
                              -------------------------------------------------------
                                    Life Reinsurance
                              ----------------------------
                              North America  International      Other         Total
                              -------------  --------------  ------------  -----------
<S>                          <C>            <C>             <C>           <C>
Premiums earned..........      $  119,468     $    26,460     $        -    $ 145,928
Investment income, net...          53,250           2,105            164       55,519
Fee income...............           1,445               -          1,100        2,545
Realized gains (losses)..          (1,289)             67         (2,176)      (3,398)
Change in value of
  embedded derivatives...          (5,509)              -              -       (5,509)
                              -------------  --------------  ------------  -----------
Total revenues...........         167,365          28,632           (912)     195,085
                              -------------  --------------  ------------  -----------

Claims and other policy
  benefits...............          88,070          16,631              -      104,701
Interest credited to
  interest sensitive
  contract liabilities...          27,685               -              -       27,685
Acquisition costs and
  other insurance
  expenses, net..........          35,374           4,115            450       39,939
Operating expenses.......           4,437           4,941          3,836       13,214
Interest expense.........           1,266               -          2,086        3,352
                              -------------  --------------  ------------  -----------
Total benefits and
  expenses...............         156,832          25,687          6,372      188,891
                              -------------  --------------  ------------  -----------
Income (loss) before
  income taxes and
  minority interest......      $   10,533     $     2,945     $   (7,284)    $  6,194
                              =============  ==============  ============  ===========
</TABLE>


                                       12

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


5.   Business segments (continued)


<TABLE>
<CAPTION>
                                        Three months ended September 30, 2003
                              -------------------------------------------------------
                                    Life Reinsurance
                              ----------------------------
                              North America  International      Other         Total
                              -------------  --------------  ------------  -----------
<S>                          <C>            <C>             <C>           <C>
Premiums earned..........      $   62,446     $   30,295     $        -     $  92,741
Investment income, net...          34,889          1,860          1,384        38,133
Fee income...............           2,128              -            804         2,932
Realized gains (losses)..             395           (89)            438           744
                              -------------  --------------  ------------  -----------
Total revenues...........          99,858         32,066          2,626       134,550
                              -------------  --------------  ------------  -----------

Claims and other policy
  benefits...............          46,559         22,865              -        69,424
Interest credited to
  interest sensitive
  contract liabilities...          33,294              -              -        33,294
Acquisition costs and
  other insurance
  expenses, net..........          21,634          5,355            604        27,593
Operating expenses.......           2,404          3,584          2,765         8,753
Interest expense.........             235              -          1,634         1,869
                              -------------  --------------  ------------  -----------
Total benefits and
  expenses...............         104,126         31,804          5,003       140,933
                              -------------  --------------  ------------  -----------
Income (loss) before
  income taxes and
  minority interest......      $   (4,268)    $      262     $   (2,377)    $  (6,383)
                              =============  ==============  ============  ===========
</TABLE>


                                       13

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


5.   Business segments (continued)


<TABLE>
<CAPTION>
                                        Nine months ended September 30, 2004
                              -------------------------------------------------------
                                    Life Reinsurance
                              ----------------------------
                              North America  International      Other         Total
                              -------------  --------------  ------------  -----------
<S>                          <C>            <C>             <C>           <C>
Premiums earned..........      $  352,340     $   82,914     $        -     $435,224
Investment income, net...         151,636          7,828            975      160,439
Fee income...............           5,795              -          2,891        8,686
Realized losses..........         (1,149)          (273)        (2,242)      (3,664)
Change in value of
  embedded derivatives...             456              -              -          456
                              -------------  --------------  ------------  -----------
Total revenues...........         509,078         90,469          1,624      601,171
                              -------------  --------------  ------------  -----------

Claims and other policy
  benefits...............         266,147         56,709              -      322,856
Interest credited to
  interest sensitive
  contract liabilities...          77,342              -              -       77,342
Acquisition costs and
  other insurance
  expenses, net..........         100,611          8,097          1,689      110,397
Operating expenses.......          13,543         13,107         10,319       36,969
Interest expense.........           2,892              -          6,234        9,126
                              -------------  --------------  ------------  -----------
Total benefits and
  expenses...............         460,535         77,913         18,242      556,690
                              -------------  --------------  ------------  -----------
Income (loss) before
  income taxes and
  minority interest......      $   48,543     $   12,556     $  (16,618)    $ 44,481
                              =============  ==============  ============  ===========
</TABLE>


                                       14

<PAGE>



                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


5.   Business segments (continued)


<TABLE>
<CAPTION>
                                        Nine months ended September 30, 2003
                              -------------------------------------------------------
                                    Life Reinsurance
                              ----------------------------
                              North America  International      Other         Total
                              -------------  --------------  ------------  -----------
<S>                          <C>            <C>             <C>           <C>
Premiums earned..........      $  158,471     $   93,825     $        -     $  252,296
Investment income, net...          97,169          5,604          3,499        106,272
Fee income...............           4,523              -          2,780          7,303
Realized gains (losses)..         (4,656)          (962)            649        (4,969)
                              -------------  --------------  ------------  -----------
Total revenues...........         255,507         98,467          6,928        360,902
                              -------------  --------------  ------------  -----------
Claims and other policy
  benefits...............         118,785         59,101              -        177,886
Interest credited to
  interest sensitive
  contract liabilities...          66,061              -              -         66,061
Acquisition costs and
  other insurance
  expenses, net..........          55,900         18,576          1,656         76,132
Operating expenses.......           6,819          9,425          8,523         24,767
Interest expense.........             712              -          4,821          5,533
                              -------------  --------------  ------------  -----------
Total benefits and
  expenses...............         248,277         87,102         15,000        350,379
                              -------------  --------------  ------------  -----------
Income (loss) before
  income taxes and
  minority interest......      $    7,230     $   11,365     $   (8,072)    $   10,523
                              =============  ==============  ============  ===========
</TABLE>



<TABLE>
<CAPTION>
        Assets                                September 30, 2004    December 31, 2003
                                              ------------------   ------------------
<S>                                         <C>                  <C>
        Life Reinsurance
           North America....................  $        5,709,085   $        4,882,222
           International....................             374,714              308,459
                                              ------------------   ------------------
        Total Life Reinsurance..............           6,083,799            5,190,681
        Other...............................             809,009              862,836
                                              ------------------   ------------------
        Total...............................  $        6,892,808   $        6,053,517
                                              ==================   ==================
</TABLE>


                                       15

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


6.   Earnings per ordinary share

     The following table sets forth the computation of basic and diluted
earnings per ordinary share:

<TABLE>
<CAPTION>
                                               Three months ended              Nine months ended
                                        -------------------------------  -------------------------------
                                          September 30,   September 30,     September        September
                                              2004             2003         30, 2004         30, 2003
                                        ---------------  --------------  ---------------  --------------
<S>                                   <C>              <C>             <C>              <C>
 Numerator:
 Net income........................      $      11,578    $      1,625     $     50,343    $     16,740
                                        ===============  ==============  ===============  ==============
 Denominator:
 Denominator for basic earnings
   per ordinary share - Weighted
   average number of ordinary
   shares..........................         35,869,413      33,248,670       35,648,913      29,119,913
 Effect of dilutive securities
   - Stock options.................            603,525       1,055,776          735,013         872,532
   - Warrants......................            771,350         936,322          852,223         655,135
   - Hybrid Capital Units..........                  -               -           32,271               -
                                        ---------------  --------------  ---------------  --------------
 Denominator for dilutive earnings
   per ordinary share..............         37,244,288      35,240,768       37,268,420      30,647,580
                                        ---------------  --------------  ---------------  --------------
 Earnings per ordinary share from
   continuing operations - Basic...      $        0.32    $       0.05     $       1.41    $       0.64
                                        ===============  ==============  ===============  ==============
 Earnings per ordinary share from
   continuing operations - Diluted.      $        0.31    $       0.05     $       1.35    $       0.60
                                        ===============  ==============  ===============  ==============
 Basic earnings per ordinary share.      $        0.32    $       0.05     $       1.41    $       0.57
                                        ===============  ==============  ===============  ==============
 Diluted earnings per ordinary share...  $        0.31    $       0.05     $       1.35    $       0.55
                                        ===============  ==============  ===============  ==============
</TABLE>


                                       16

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


7.   Derivatives

     During the quarter ended September 30, 2004, we entered into an interest
rate swap contract in the amount of $100.0 million in relation to certain of our
investment assets not supporting reinsurance liabilities. This contract is
accounted for in accordance with SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 requires that all derivatives
be recognized as either assets or liabilities on the balance sheet and be
measured at fair value. This derivative has not been designated as a hedge. The
fair value of the swap at September 30, 2004 was a negative $2.2 million. This
loss of $2.2 million has been included in realized gains (losses) in the
statement of income.

8.   Deferred acquisition costs

     The change in deferred acquisition costs is as follows:

<TABLE>
<CAPTION>
                                         Three months ended              Nine months ended
                                  -------------------------------  -------------------------------
                                    September 30,   September 30,   September 30     September 30
                                        2004             2003           2004             2003
                                  ---------------  --------------  ---------------  --------------
<S>                             <C>              <C>             <C>              <C>

 Balance beginning of period..      $    391,049     $  262,015       $  308,591      $  213,516
 Expenses deferred............            43,484         37,927          168,259         105,856
 Amortization expense.........           (22,365)       (14,216)         (64,355)        (35,803)
 Deferred acquisition costs
  on realized gains (losses)..              (288)          (790)            (615)          1,367
                                  ---------------  --------------  ---------------  --------------
    Balance end of period.....      $    411,880     $  284,936       $  411,880      $  284,936
                                  ---------------  --------------  ---------------  --------------
</TABLE>

9.   Goodwill

     During the quarter, we received a payment of $1.7 million in respect of a
settlement of the purchase price of Scottish Re Holdings Limited (formerly
World-Wide Holdings Limited). This settlement arose on the finalization of
income taxes due for periods prior to the acquisition and has resulted in a
decrease in the goodwill arising on the acquisition.

10.  Other assets

     Included in other assets as of September 30, 2004 is an amount of $4.9
million in respect of professional fees and other costs incurred for due
diligence activities of potential acquisition targets. At September 30, 2004 the
timing and certainty of completion of the proposed acquisitions cannot be
determined. In the event that we determine that some of these transactions will
not be completed we shall recognize a charge to income.

11.  Structured finance facility liability

     On June 25, 2004, we closed a structured finance facility with HSBC Bank
USA, N.A. This facility provides $200.0 million that can be used to
collateralize reinsurance obligations under intercompany reinsurance agreements.
Simultaneously we entered into a total return swap with HSBC Bank USA, N.A.
under which we are entitled to the total return of the investment portfolio of
the trust established for this facility. In accordance with FIN 46 we are
considered to hold a beneficial interest in


                                       17

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


11.  Structured finance facility liability (continued)

the trust, which is in turn considered to be a variable interest entity. As a
result, the trust has been consolidated in these financial statements.

     The assets of the variable interest entity have been recorded as fixed
maturity investments. Our consolidated income statements show the investment
return of the variable interest entity as investment income and the cost of the
facility in acquisition costs and other insurance expenses.

     The creditors of the variable interest entity have no recourse against our
general assets.

12.  Long-term debt


     Long-term debt consists of:

<TABLE>
<CAPTION>
                                                       September 30, 2004      December 31, 2003
                                                     ----------------------   -------------------
<S>                                                 <C>                     <C>
4.5% senior convertible notes due 2022.............  $            115,000     $          115,000
Capital securities due 2032........................                17,500                 17,500
Trust preferred securities due 2033................                20,000                 20,000
Trust preferred securities due 2033................                10,000                 10,000
Trust preferred securities due 2034................                32,000                      -
                                                     ----------------------   -------------------
Total                                                $            194,500     $          162,500
                                                     ======================   ===================
</TABLE>

4.5% senior convertible notes

     On November 22, 2002 and November 27, 2002, we issued an aggregate of
$115.0 million (which included an over allotment option of $15.0 million) of
4.5% senior convertible notes, which are due December 1, 2022, to qualified
institutional buyers. The notes are general unsecured obligations, ranking on a
parity in right of payment with all our existing and future unsecured senior
indebtedness, and senior in right of payment with all our future subordinated
indebtedness. Interest on the notes is payable on June 1 and December 1 of each
year. The notes are rated Baa2 by Moody's Investors Service ("Moody's") and BBB-
by Standard & Poor's Ratings Group ("Standard & Poor's").

     The notes are convertible into our ordinary shares at an initial conversion
rate of 46.0617 ordinary shares per $1,000 principal amount of notes (equivalent
to an initial conversion price of $21.71 per ordinary share). On conversion, we
shall settle the principal amount of $115.0 million in cash. We have the right
to deliver, in lieu of our ordinary shares, cash or a combination of cash and
our ordinary shares for amounts in excess of the principal of $115.0 million.
The notes are redeemable at our option in whole or in part beginning on December
6, 2006, at a redemption price equal to 100% of the principal amount of the
notes plus accrued and unpaid interest. The notes are subject to repurchase by
us upon a change of control of Scottish Re or at a holder's option on December
6, 2006, December 1, 2010, December 1, 2012 and December 1, 2017, at a
repurchase price equal to 100% of the principal amount of the notes plus accrued
and unpaid interest. The notes are due on December 1, 2022 unless earlier
converted, redeemed by us at our option or repurchased by us at a holder's
option.

     A holder may surrender notes for conversion prior to the stated maturity
only under the following circumstances:


                                       18

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


12.  Long-term debt (continued)

     o    during any conversion period if the sale price of our ordinary shares
          for at least 20 trading days in the period of 30 consecutive trading
          days ending on the first day of the conversion period exceeds 120% of
          the conversion price in effect on that 30th trading day;

     o    during any period in which the notes are rated by either Moody's or
          Standard & Poor's and the credit rating assigned to the notes by
          either rating agency is downgraded by two levels or more, suspended or
          withdrawn;

     o    if we have called those notes for redemption; or

     o    upon the occurrence of certain specified corporate transactions.

     Under a registration rights agreement, we agreed to file with the
Securities and Exchange Commission a shelf registration statement for resale of
the notes and our ordinary shares issuable upon conversion of the notes. This
registration statement was filed and later declared effective by the Securities
and Exchange Commission on April 4, 2003.

Capital securities due 2032

     On December 4, 2002, Scottish Holdings Statutory Trust I, a Connecticut
statutory business trust ("Capital Trust") issued and sold in a private offering
an aggregate of $17.5 million Floating Rate Capital Securities (the "Capital
Securities"). All of the common shares of the Capital Trust are owned by
Scottish Holdings, Inc., our wholly owned subsidiary.

     The Capital Securities mature on December 4, 2032. They are redeemable in
whole or in part at any time after December 4, 2007. Interest is payable
quarterly at a rate equivalent to 3 month LIBOR plus 4%. At September 30, 2004
and December 31, 2003, the interest rates were 6.02% and 5.15%, respectively.
Prior to December 4, 2007, interest cannot exceed 12.5%. The Capital Trust may
defer payment of the interest for up to 20 consecutive quarterly periods, but no
later than December 4, 2032. Any deferred payments would accrue interest
quarterly on a compounded basis if Scottish Holdings, Inc. defers interest on
the Debentures due December 4, 2032 (as defined below).

     The sole assets of the Capital Trust consist of $18.0 million principal
amount of Floating Rate Debentures (the "Debentures") issued by Scottish
Holdings, Inc. The Debentures mature on December 4, 2032 and interest is payable
quarterly at a rate equivalent to 3 month LIBOR plus 4%. At September 30, 2004
and December 31, 2003, the interest rates were 6.02% and 5.15%, respectively.
Prior to December 4, 2007, interest cannot exceed 12.5%. Scottish Holdings, Inc.
may defer payment of the interest for up to 20 consecutive quarterly periods,
but no later than December 4, 2032. Any deferred payments would accrue interest
quarterly on a compounded basis. Scottish Holdings, Inc. may redeem the
Debentures at any time after December 4, 2007 in the event of certain changes in
tax or investment company law.

     Scottish Annuity & Life Insurance Company (Cayman) Ltd. has guaranteed
Scottish Holdings, Inc.'s obligations under the Debentures and distributions and
other payments due on the Capital Securities.


                                       19

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


12.  Long-term debt (continued)

Trust preferred securities due 2033

     On October 29, 2003, Scottish Holdings, Inc. Statutory Trust II, a
Connecticut statutory business trust ("Capital Trust II") issued and sold in a
private offering an aggregate of $20.0 million Preferred Trust Securities (the
"Trust Preferred Securities"). All of the common shares of Capital Trust II are
owned by Scottish Holdings, Inc.

     The Trust Preferred Securities mature on October 29, 2033. They are
redeemable in whole or in part at any time after October 29, 2008. Interest is
payable quarterly at a rate equivalent to 3 month LIBOR plus 3.95%. At September
30, 2004 and December 31, 2003, the interest rates were 5.97% and 5.10%,
respectively. Prior to October 29, 2008, interest cannot exceed 12.45%. Capital
Trust II may defer payment of the interest for up to 20 consecutive quarterly
periods, but no later than October 29, 2033. Any deferred payments would accrue
interest quarterly on a compounded basis if Scottish Holdings, Inc. defers
interest on the Floating Rate Debentures due October 29, 2033 (as described
below).

     The sole assets of Capital Trust II consist of $20.6 million principal
amount of Floating Rate Debentures (the "2033 Floating Rate Debentures") issued
by Scottish Holdings, Inc. The 2033 Floating Rate Debentures mature on October
29, 2033 and interest is payable quarterly at 3 month LIBOR plus 3.95%. At
September 30, 2004 and December 31, 2003, the interest rates were 5.97% and
5.10%, respectively. Prior to October 29, 2008, interest cannot exceed 12.45%.
Scottish Holdings, Inc. may defer payment of the interest for up to 20
consecutive quarterly periods, but no later than October 29, 2033. Any deferred
payments would accrue interest quarterly on a compounded basis. Scottish
Holdings, Inc. may redeem the 2033 Floating Rate Debentures at any time after
October 29, 2008 and in the event of certain changes in tax or investment
company law.

     Scottish Annuity & Life Insurance Company (Cayman) Ltd. has guaranteed
Scottish Holdings, Inc.'s obligations under the 2033 Floating Rate Debentures
and distributions and other payments due on the Trust Preferred Securities.

Trust preferred securities due 2033

     On November 14, 2003, GPIC Holdings Inc. Statutory Trust, a Delaware
statutory business trust ("GPIC Trust") issued and sold in a private offering an
aggregate of $10.0 million Trust Preferred Securities (the "2033 Trust Preferred
Securities"). All of the common shares of GPIC Trust are owned by Scottish
Holdings, Inc.

     The 2033 Trust Preferred Securities mature on September 30, 2033. They are
redeemable in whole or in part at any time after September 30, 2008. Interest is
payable quarterly at a rate equivalent to 3 month LIBOR plus 3.90%. At September
30, 2004 and December 31, 2003, the interest rates were 5.92% and 5.05%,
respectively. GPIC Trust may defer payment of the interest for up to 20
consecutive quarterly periods, but no later than September 30, 2033. Any
deferred payments would accrue interest quarterly on a compounded basis if
Scottish Holdings, Inc. defers interest on the Junior Subordinated Notes due
September 30, 2033 (as described below).

     The sole assets of GPIC Trust consist of $10.3 million principal amount of
Junior Subordinated Notes (the "Junior Subordinated Notes") issued by Scottish
Holdings, Inc. The Junior Subordinated Notes mature on September 30, 2033 and
interest is payable quarterly at 3 month LIBOR plus 3.90%. At September 30, 2004
and December 31, 2003, the interest rates were 5.92% and 5.05%, respectively.


                                       20

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


12.  Long-term debt (continued)

Scottish Holdings, Inc. may defer payment of the interest for up to 20
consecutive quarterly periods, but no later than September 30, 2033. Any
deferred payments would accrue interest quarterly on a compounded basis.
Scottish Holdings, Inc. may redeem the Junior Subordinated Notes at any time
after September 30, 2008 and in the event of certain changes in tax or
investment company law.

     Scottish Annuity & Life Insurance Company (Cayman) Ltd. has guaranteed
Scottish Holdings, Inc.'s obligations under the Junior Subordinated Notes and
distributions and other payments due on the 2033 Trust Preferred Securities.

Trust preferred securities due 2034

     On May 12, 2004, Scottish Holdings, Inc. Statutory Trust III, a Connecticut
statutory business trust ("Capital Trust III") issued and sold in a private
offering an aggregate of $32.0 million Trust Perferred Securities (the "2034
Trust Preferred Securities"). All of the common shares of Capital Trust III are
owned by Scottish Holdings, Inc.

     The 2034 Trust Preferred Securities mature on June 17, 2034. They are
redeemable in whole or in part at any time after June 17, 2009. Interest is
payable quarterly at a rate equivalent to 3 month LIBOR plus 3.80%. At September
30, 2004, the interest rate was 5.82%. Prior to June 17, 2009, interest cannot
exceed 12.50%. Capital Trust III may defer payment of the interest for up to 20
consecutive quarterly periods, but no later than June 17, 2034. Any deferred
payments would accrue interest quarterly on a compounded basis if Scottish
Holdings, Inc. defers interest on the 2034 Floating Rate Debentures due June 17,
2034 (as described below).

     The sole assets of Capital Trust III consist of $33.0 million principal
amount of Floating Rate Debentures (the "2034 Floating Rate Debentures") issued
by Scottish Holdings, Inc. The 2034 Floating Rate Debentures mature on June 17,
2034 and interest is payable quarterly at 3 month LIBOR plus 3.80%. At September
30, 2004 the interest rate was 5.82%. Prior to June 17, 2009, interest cannot
exceed 12.50%. Scottish Holdings, Inc. may defer payment of the interest for up
to 20 consecutive quarterly periods, but no later than June 17, 2034. Any
deferred payments would accrue interest quarterly on a compounded basis.
Scottish Holdings, Inc. may redeem the 2034 Floating Rate Debentures at any time
after June 17, 2009 and in the event of certain changes in tax or investment
company law.

     Scottish Annuity & Life Insurance Company (Cayman) Ltd. has guaranteed
Scottish Holdings, Inc.'s obligations under the 2034 Floating Rate Debentures
and distributions and other payments due on the 2034 Trust Preferred Securities.

13.  Mezzanine equity

     On December 17 and December 22, 2003, we issued in a public offering
5,750,000 Hybrid Capital Units ("HyCUs"). The aggregate net proceeds were $141.9
million. Each HyCU consists of:

     o    A purchase contract under which the holder agrees to purchase an
          agreed upon number of ordinary shares on February 15, 2007 at a
          purchase price of $25.00; and

     o    A convertible preferred share with a liquidation preference of $25.00,
          convertible into ordinary shares, which we will settle in cash and
          ordinary shares on May 21, 2007.


                                       21

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


13.  Mezzanine equity (continued)

The agreed upon number of shares that a purchase contract will be settled for is
called the "settlement rate". The settlement rate on each purchase contract is
as follows:

     o    If the average closing price per ordinary share on each of the 20
          consecutive trading days ending on the fourth trading day preceding
          February 15, 2007 (the "Applicable Market Value"), is less than or
          equal to $19.32, then each purchase contract will be settled for 1.294
          ordinary shares.

     o    If the Applicable Market Value is greater than $19.32, then each
          purchase contract will be settled for a number of ordinary shares by
          dividing $25.00 by the Applicable Market Value.

     The convertible shares will be initially convertible into 1.0607 ordinary
shares per $25.00 liquidation preference (referred to as the "conversion rate"),
subject to anti-dilution adjustments. This reflects an initial conversion price
of $23.57. Upon conversion we will deliver cash equal to the $25.00 liquidation
preference and ordinary shares for the value of the excess, if any, of the
conversion obligation minus the liquidation preference. The conversion
obligation is the conversion rate at the time of conversion multiplied by the
average trading price of our ordinary shares for a specified period following
the redemption date.

     Amounts will accumulate under the HyCUs at a rate of 5.875% per year,
payable quarterly beginning February 14, 2004. These amounts will consist of:

     o    Quarterly contract adjustment payments at a rate of 4.875% per year;
          and

     o    Dividends at a rate of 1.00% per year on the convertible preferred
          shares, payable quarterly when declared by our board of directors.

     We may defer contract adjustment payments until no later than the purchase
contract settlement date.

     Each convertible preferred share is pledged to us to secure the holder's
obligation under the purchase contract. A holder of the HyCU can obtain the
release of the pledged convertible share by substituting zero-coupon treasury
securities as security for the obligation under the purchase contract. The
resulting unit is then known as a Treasury Unit. Holders of Treasury Units can
recreate HyCUs by re-substituting the convertible preferred shares and
withdrawing the treasury securities.

     The convertible preferred shares will be mandatorily redeemed on May 21,
2007.

     We have accounted for the HyCUs in accordance with SFAS No. 150 "
Accounting for Certain Instruments with Characteristics of Debt and Equity".

14.  Shareholders' equity

     During the quarter ended September 30, 2004 and 2003, respectively, we
issued 77,500 and 146,369 ordinary shares to employees upon the exercise of
stock options. During the nine months ended September 30, 2004 and 2003,
respectively, we issued 677,551 and 381,955 ordinary shares to employees upon
the exercise of stock options.


                                       22

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


15.  Stock option plans

     At September 30, 2004, we had four stock option plans (the "1998 Plan", the
"1999 Plan", the "Harbourton Plan" and the "2001 Plan", collectively the
"Plans") and an equity incentive compensation plan ("the 2004 ECP").

     The Plans allow us to grant non-statutory options, subject to certain
restrictions, to certain eligible employees, non-employee directors, advisors
and consultants. The minimum exercise price of the options will be equal to the
fair market value, as defined in the Plans, of our ordinary shares at the date
of grant. The term of the options is between seven and ten years from the date
of grant. Unless otherwise provided in each option agreement, all granted
options issued prior to December 31, 2001 become exercisable in three equal
annual installments. Commencing January 1, 2002, all granted options became
exercisable in five equal installments commencing on the first anniversary of
the grant date, except for annual grants of 2,000 to each director, which are
fully exercisable on the date of grant. Total options authorized under the Plans
are 3,750,000.

     At our Annual General Meeting held on May 5, 2004, our shareholders
approved the 2004 ECP. This plan allows us to grant non-statutory options and
restricted stock, subject to certain restrictions, to certain eligible
employees, non-employee directors, advisors and consultants. For the first year
of the 2004 ECP or the first 250,000 options issued, the minimum exercise price
of the options will be equal to 110% of fair market value. At the discretion of
our Compensation Committee, option grants after the first year of the 2004 ECP
or in excess of 250,000 options may have a minimum exercise price equal to the
fair market value of our ordinary shares at the date of grant. The term of the
options shall not be more than ten years from the date of grant. Options will
become exercisable in three equal installments commencing on the first
anniversary of the grant date. Total options authorized under the 2004 ECP are
750,000. In addition, 1,000,000 restricted shares have been authorized under the
2004 ECP of which at least 750,000 will vest based on achievement of certain
performance goals. The remaining 250,000 restricted shares may be issued without
performance goals.

     Pro forma information regarding net income and earnings per share for all
outstanding stock options is required by SFAS No. 148 "Accounting for
Stock-Based Compensation - Transition and Disclosure - an amendment of FASB
Statement No. 123" and has been determined as if we accounted for all employee
stock options under the fair value method of that Statement.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period using the
Black-Scholes model. The Black-Scholes model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected price volatility. Because our
employee stock options have characteristics significantly different from those
of traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
our employee stock options.


                                       23

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


15.  Stock option plans (continued)

     Our pro forma information is as follows:

<TABLE>
<CAPTION>
                                               Three months ended              Nine months ended
                                        -------------------------------  -------------------------------
                                          September 30,   September 30,   September 30,    September 30,
                                              2004             2003           2004             2003
                                        ---------------  --------------  ---------------  --------------
<S>                                     <C>            <C>                <C>              <C>

 Net income -- as reported..........      $    11,578    $        1,625      $   50,343       $     16,740
 Stock-based employee compensation
    cost, net of related tax
    effects, included in the
    determination of net income as
    reported.......................               127                77             340                158
 Stock-based employee compensation
    cost, net of related tax effects,
    that would have been included in
    the determination of net income
    if the fair value based method had
    been applied to all awards..........         (305)             (562)         (1,028)            (1,881)
                                          -----------     -------------      ----------       ------------
 Net income -- pro forma............      $    11,400     $       1,140      $   49,655       $     15,017
                                          ===========     =============      ==========       ============

 Basic earnings per ordinary share
    -- as reported..................      $      0.32     $        0.05      $     1.41       $       0.57
                                          ===========     =============      ==========       ============
 Basic earnings per ordinary share
    -- pro forma....................      $      0.32     $        0.03      $     1.39       $       0.52
                                          ===========     =============      ==========       ============
 Diluted earnings per ordinary
    share -- as reported............      $      0.31     $        0.05      $     1.35       $       0.55
                                          ===========     =============      ==========       ============
 Diluted earnings per ordinary
    share -- pro forma..............      $      0.31     $        0.03      $     1.33       $       0.49
                                          ===========     =============      ==========       ============
</TABLE>


                                       24

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


16.  Credit facilities

     During 2003, we renewed our credit facilities, which as of September 30,
2004 consisted of:

     a)   a credit facility totaling $50.0 million, of which $25.0 million is
          available on an unsecured basis and $25.0 million is available on a
          secured basis. The facility provides capacity for borrowings and
          letters of credit. The interest rates on amounts borrowed under the
          secured facility is LIBOR plus 50 basis points and under the unsecured
          facility is LIBOR plus 75 basis points. This facility was scheduled to
          expire in October 2004 and was extended to December 31, 2004. It is
          renewable upon the agreement of both parties.

     b)   a secured credit facility totaling $50.0 million. This facility
          provides a combination of borrowings and letters of credit. Interest
          rates on amounts borrowed under this facility is LIBOR plus 45 basis
          points. This facility was scheduled to expire in September 2004 and
          was extended to December 1, 2004. It is renewable upon the agreement
          of both parties.

     One of the facilities requires that Scottish Annuity & Life Insurance
Company (Cayman) Ltd. maintains shareholder's equity of at least $340.0 million.
At September 30, 2004, Scottish Annuity & Life Insurance Company (Cayman) Ltd.'s
shareholder's equity was $821.8 million. The other facility requires that we
maintain consolidated net worth of $520.0 million, a maximum debt to total
capitalization ratio of 30% and uncollateralized assets of 1.2 times any
unsecured borrowings. At September 30, 2004, our net worth was $720.9 million
and the ratio of debt to total capitalization was 18.4%. Our failure to comply
with the requirements of the credit facilities would, subject to grace periods,
result in an event of default, and we could be required to repay any outstanding
borrowings. At September 30, 2004, there were no borrowings under the
facilities. Outstanding letters of credit under these facilities amounted to
$33.8 million as at September 30, 2004 and $31.2 million at December 31, 2003.

     We also have a reverse repurchase agreement with a major broker/dealer.
Under this agreement, we have the ability to sell agency mortgage backed
securities with the agreement to repurchase them at a fixed price, providing the
dealer with a spread that equates to an effective borrowing cost linked to
one-month LIBOR. This agreement is renewable monthly at the discretion of the
broker/dealer. At September 30, 2004 and December 31, 2003, there were no
borrowings under this agreement.

17.   Restatement of Unaudited Consolidated Financial Statements

     During the fourth quarter of 2004, we determined that our International
Segment had incorrectly reported premiums earned, claims and other policy
benefits, acquisition costs and other insurance expenses and related income tax
benefits in the quarters ended June 30, 2004 and September 30, 2004. The effect
of these errors was to understate net income by $1.1 million in the three months
ended June 30, 2004, or $0.03 per diluted ordinary share, to overstate net
income by $1.2 million in the three months ended September 30, 2004, or $0.03
per diluted share, to overstate net income by $112,000 in the nine month period
ended September 30, 2004 and to overstate shareholder's equity by $112,000 at
September 30, 2004. There is no impact on the previously reported earnings per
diluted ordinary share for the nine months ended September 30, 2004.


                                       25

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


17.   Restatement of Unaudited Consolidated Financial Statements (continued)

     The errors were made in the process of compiling income statement
information on the accrual of premiums and resulted from incorrect references
within the spreadsheets used to calculate these accruals. As a result, incorrect
information was referenced to prepare the journal entries used in updating the
general ledger for the International Segment. The errors were detected by
management as part of their ongoing documentation and testing of internal
controls over financial reporting for Sarbanes Oxley Section 404 reporting.

     Management has taken a series of steps in its ongoing review of internal
controls over financial reporting to improve control processes, including those
involving the compilation of information used in reporting premium accruals, and
to avoid similar errors going forward. Management has also taken steps to
improve controls around segregation of responsibilities and review of manually
prepared information and has strengthened procedures for the reconciliation of
all material general ledger balances.

     A summary of the effects of corrections of these amounts for the three and
nine months ended September 30, 2004 is as follows:


Unaudited Consolidated Balance Sheet                     September 30, 2004

                                                       As Previously
                                                         Reported     Restated

Reinsurance balances and risk fees receivable           $   290,763  $  288,377
Deferred acquisition costs                                  411,540     411,880
Deferred tax benefit                                          8,913       9,623
Total assets                                              6,894,144   6,892,808
Reserves for future policy benefits                       1,603,840   1,602,348
Reinsurance balances payable                                 93,678      93,946
Total liabilities                                         6,021,323   6,020,099
Retained earnings                                           126,814     126,702
Total shareholders' equity                                  720,990     720,878
Total liabilities and shareholders' equity             $  6,894,144  $6,892,808


<TABLE>
<CAPTION>
                                                         Three Months Ended        Nine Months Ended
                                                         September 30, 2004        September 30, 2004

                                                      As Previously            As Previously
Unaudited Consolidated Statement of Income              Reported     Restated     Reported     Restated
<S>                                                   <C>          <C>          <C>           <C>

Premiums earned                                         $   148,987   $ 145,928    $  440,217   $ 435,254
Total revenues                                              198,144     195,085       606,134     601,171
Claims and other policy benefits                            104,970     104,701       324,112     322,856
Acquisition costs and other insurance expenses, net          40,312      39,939       113,282     110,397
Total benefits and expenses                                 189,533     188,891       560,831     556,691
Income before income taxes and minority interest              8,611       6,194        45,303      44,481
Income tax benefit                                            4,212       5,401         5,507       6,217
Income before minority interest                              12,823      11,595        50,810      50,698
Net income                                              $    12,806   $  11,578    $   50,455   $  50,343
Earnings per ordinary share from continuing
operations - Basic                                      $      0.36   $    0.32    $     1.42   $    1.41


                                       26

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


17.  Restatement of Unaudited Consolidated Financial Statements (continued)

Earnings per ordinary share from continuing
operations - Diluted                                    $      0.34   $    0.31    $     1.35   $    1.35
Earnings Per Ordinary Share - Basic                     $      0.36   $    0.32    $     1.42   $    1.41
Earnings Per Ordinary Share - Diluted                   $      0.34   $    0.31    $     1.35   $    1.35

Unaudited Consolidated Statement of Comprehensive Income
Net income                                              $    12,806   $  11,578    $   50,455   $  50,343
Comprehensive income (loss)                             $    53,588   $  52,360    $   59,065   $  58,953

Unaudited Consolidated Statement of Shareholders' Equity
Net income                                                                         $   50,455   $  50,343
Retained earnings - end of period                                                     126,814     126,702
Total shareholders' equity                                                         $  720,990   $ 720,878

Unaudited Consolidated Statement of Cash Flows
Net income                                                                         $   50,455   $  50,343
Change in assets and liabilities:
   Reinsurance balances and risk fees receivable                                     (151,793)   (149,139)
   Deferred acquisition costs                                                        (167,919)   (168,260)
   Deferred tax benefit                                                                (9,499)    (10,209)
   Reserves for future policy benefits                                            $   171,106  $  169,615

Note 5 Business Segments

Restatements were in respect of the International Business Segment as follows:

Premiums earned                                         $    29,519   $  26,460   $    87,877  $   82,914
Total revenues                                               31,691      28,632        95,423      90,469
Claims and other policy benefits                             16,900      16,631        57,965      56,709
Acquisition costs and other insurance expenses, net           4,488       4,115        10,982       8,097
Total benefits and expenses                                  26,329      25,687        82,054      77,913
Income before income taxes and minority interest        $     5,362   $   2,945   $    13,378  $   12,556

Note 6 Earnings per ordinary share

Net income                                              $    12,806   $  11,578   $    50,455  $   50,343
Earnings per ordinary share from continuing
operations - Basic                                      $      0.36   $    0.32   $      1.42  $     1.41
Earnings per ordinary share from continuing
operations - Diluted                                    $      0.34   $    0.31   $      1.35  $     1.35
Earnings per ordinary share - Basic                     $      0.36   $    0.32   $      1.42  $     1.41
Earnings per ordinary share - Diluted                   $      0.34   $    0.31   $      1.35  $     1.35

Note 8 Deferred acquisition costs

Expenses deferred                                       $    43,144   $  43,484   $   167,919  $  168,259
Balance - end of period                                 $   411,540     411,880   $   411,540  $  411,880


                                       27

<PAGE>


                            Scottish Re Group Limited
        Notes to Unaudited Consolidated Financial Statements (continued)
                               September 30, 2004


17.  Restatement of Unaudited Consolidated Financial Statements (continued)

Note 15 Stock option plans

Net income - as reported                                $     12,806  $  11,578   $    50,455  $   50,343
Net income - pro forma                                  $     12,628  $  11,400   $    49,767  $   49,655
Basic earnings per ordinary share - as reported         $       0.36  $    0.32   $      1.42  $     1.41
Basic earnings per ordinary share - pro forma           $       0.35  $    0.32   $      1.40  $     1.39
Diluted earnings per ordinary share - as reported       $       0.34  $    0.31   $      1.35  $     1.35
Diluted earnings per ordinary share - pro forma         $       0.34  $    0.31   $      1.34  $     1.33
</TABLE>


                                       28

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

General

     We are a holding company organized under the laws of the Cayman Islands
with our principal executive office in Bermuda. We are a reinsurer of life
insurance, annuities and annuity-type products. These products are written by
life insurance companies and other financial institutions located principally in
the United States, as well as around the world. We refer to this portion of our
business as Life Reinsurance North America. Scottish Re Holdings Limited and its
subsidiary Scottish Re Limited specialize in niche markets in developed
countries and broader life insurance markets in the developing world. We refer
to this portion of our business as Life Reinsurance International. To a lesser
extent, we directly issue variable life insurance and variable annuities and
similar products to high net worth individuals and families for insurance,
investment and estate planning purposes. In prior years, we referred to this
portion of our business as Wealth Management, which was another reportable
operating segment. As this business is no longer a major contributor to our
results, we have combined reporting of this segment with our Other Segment for
all periods presented. Other revenues and expenses not related to Life
Reinsurance are reported in the Other Segment.

     On October 18, 2004, we announced that we had agreed to acquire the
individual life reinsurance business of ING Re. We will reinsure the liabilities
of all of ING Re's individual life reinsurance business through a coinsurance
transaction. ING Re will transfer to us assets equal to reserves of
approximately $800.0 million and will pay a ceding commission of $560.0 million.
These assets will be held in trust to secure the reserve obligations of the
business. Additionally, ING Re will transfer certain operating assets associated
with the business. Following the acquisition, we will have approximately $1.0
trillion of face amount of life reinsurance in-force, $8.8 billion in assets,
$2.1 billion in revenues and a capital base of approximately $1.3 billion.

     In addition to the assets to be transferred by ING Re, we will raise an
additional $230.0 million in new capital, which will satisfy the capital
requirements for the acquired business. This new capital includes $180.0 million
to be provided by The Cypress Group, a private equity firm, and an additional
$50.0 million of trust preferred securities.

     On December 22, 2003, we completed the acquisition of 95% of the
outstanding capital stock of ERC Life Reinsurance Corporation for $151.0 million
in cash, subject to certain closing adjustments. We have agreed and settled the
post closing adjustment at $18.9 million. On February 19, 2004, ERC Life
Reinsurance Corporation's name was changed to Scottish Re Life Corporation.
Scottish Re Life Corporation was a subsidiary of General Electric's Employers
Reinsurance Corporation, which we call GE ERC, and was one of the companies
through which GE ERC conducted life reinsurance business in the United States.
Scottish Re Life Corporation's business consists primarily of a closed block of
traditional life reinsurance. GE ERC agreed to administer the business of
Scottish Re Life Corporation for a fixed monthly fee for up to nine months from
the date of acquisition and to assist with the transition of the business to our
systems. No GE ERC employees were transferred. This transition period has now
been completed. Scottish Re Life Corporation is rated "A- (excellent)" by A.M.
Best Company.

     All amounts are reported in thousands of United States dollars, except per
share amounts.


                                       29

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


Revenues

     We derive revenue from three principal sources:

     o    premiums from reinsurance assumed on life business;

     o    investment income from our investment portfolio; and

     o    realized gains and losses from our investment portfolio.

     Premiums from reinsurance assumed on life business are included in revenues
over the premium paying period of the underlying policies. When we acquire
blocks of in-force business, we account for these transactions as purchases, and
our results of operations include the net income from these blocks as of their
respective dates of acquisition. Reinsurance assumed on annuity business does
not generate premium income but generates investment income over time on the
assets we receive from the ceding company. We also earn fees in our financial
reinsurance transactions with U.S. insurance company clients. Because some of
these transactions do not satisfy the risk transfer rules for reinsurance
accounting, the premiums and benefits are not reported in the consolidated
statements of income. A deposit received on a funding agreement also does not
generate premium income but does create income to the extent we earn an
investment return in excess of our interest payment obligations thereon.

     Our investment income includes interest earned on our fixed maturity
investments and income from funds withheld at interest under modified
coinsurance agreements. Under generally accepted accounting principles, because
our fixed maturity investments are held as available for sale, these securities
are carried at fair value, and unrealized appreciation and depreciation on these
securities is not included in investment income on our statements of income, but
is included in comprehensive income as a separate component of shareholders'
equity. Realized gains and losses include gains and losses on investment
securities that we sell during a period and write downs of securities deemed to
be other than temporarily impaired.

Expenses

     We have five principal types of expenses:

     o    claims and policy benefits under our reinsurance contracts;

     o    interest credited to interest sensitive contract liabilities;

     o    acquisition costs and other insurance expenses;

     o    operating expenses; and

     o    interest expense.

     When we issue a life reinsurance contract, we establish reserves for
benefits. These reserves are our estimates of what we expect to pay in claims
and policy benefits and related expenses under the contract or policy. From time
to time, we may also add to reserves if our experience leads us to believe that
benefit claims and expenses will ultimately be greater than the existing
reserve. We report the change in these reserves as an expense during the period
when the reserve or additional reserve is established.


                                       30

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     In connection with reinsurance of annuity and annuity-type products, we
record a liability for interest sensitive contract liabilities, which represents
the amount ultimately due to the policyholder. We credit interest to these
contracts each period at the rates determined in the underlying contract, and
the amount is reported as interest credited to interest sensitive contract
liabilities on our consolidated statements of income.

     A portion of the costs of acquiring new business, such as commissions,
certain internal expenses related to our policy issuance and underwriting
departments and some variable selling expenses are capitalized. The resulting
deferred acquisition costs asset is amortized over future periods based on our
expectations as to the emergence of future gross profits from the underlying
contracts. These costs are dependent on the structure, size and type of business
written. For certain products, we may retrospectively adjust our amortization
when we revise our estimate of current or future gross profits to be realized.
The effects of this adjustment are reflected in earnings in the period in which
we revise our estimate.

     Operating expenses consist of salary and salary related expenses, legal and
professional fees, rent and office expenses, travel and entertainment,
directors' expenses, insurance and other similar expenses, except to the extent
capitalized in deferred acquisition costs.

     Interest expense consists of interest charges on our borrowings.

Factors affecting profitability

     We seek to generate profits from two principal sources. First, in our Life
Reinsurance business, we seek to receive reinsurance premiums and financial
reinsurance fees that, together with income from the assets in which those
premiums are invested, exceed the amounts we ultimately pay as claims and policy
benefits, acquisition costs and ceding commissions. Second, within our
investment guidelines, we seek to maximize the return on our unallocated
capital.

     The following factors affect our profitability:

     o    the volume of business we write;

     o    our ability to assess and price adequately for the risks we assume;

     o    the mix of different types of business that we reinsure, because
          profits on some kinds of business emerge later than on other types;

     o    our ability to manage our assets and liabilities to manage investment
          and liquidity risk; and

     o    our ability to control expenses.

     In addition, our profits can be affected by a number of factors that are
not within our control. For example, movements in interest rates can affect the
volume of business that we write, the income earned from our investments, the
interest we credit on interest sensitive contracts, the level of surrender
activity on contracts that we reinsure, the rate at which we amortize deferred
acquisition costs and the change in value of our embedded derivatives. Other
external factors that can affect profitability include mortality experience that
varies from our assumed mortality, changes in regulation or tax laws, which may
affect the attractiveness of our products or the costs of doing business and
changes in foreign currency exchange rates.


                                       31

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


Critical Accounting Policies

     Statement of Financial Accounting Standards ("SFAS") No. 60 "Accounting and
Reporting by Insurance Enterprises" applies to our traditional life policies
with continuing premiums. For these policies, future benefits are estimated
using a net level premium method on the basis of actuarial assumptions as to
mortality, persistency and interest established at policy issue. Assumptions
established at policy issue as to mortality and persistency are based on
anticipated experience, which, together with interest and expense assumptions,
provide a margin for adverse deviation. Acquisition costs are deferred and
recognized as expense in a constant percentage of the gross premiums using these
assumptions established at issue. Should the liabilities for future policy
benefits plus the present value of expected future gross premiums for a product
be insufficient to provide for expected future benefits and expenses for that
product, deferred acquisition costs will be written off and thereafter, if
required, a premium deficiency reserve will be established by a charge to
income. Changes in the assumptions for mortality, persistency and interest could
result in material changes to the financial statements.

     SFAS No. 97 "Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sale of
Investments" applies to investment contracts, limited premium contracts, and
universal life-type contracts. For investment and universal life-type contracts,
future benefit liabilities are held using the retrospective deposit method,
increased for amounts representing unearned revenue or refundable policy
charges. Acquisition costs are deferred and recognized as expense as a constant
percentage of gross margins using assumptions as to mortality, persistency, and
expense established at policy issue without provision for adverse deviation and
are revised periodically to reflect emerging actual experience and any material
changes in expected future experience. Liabilities and the deferral of
acquisition costs are established for limited premium policies under the same
practices as used for traditional life policies with the exception that any
gross premium in excess of the net premium is deferred and recognized into
income as a constant percentage of insurance in force. Should the liabilities
for future policy benefits plus the present value of expected future gross
premiums for a product be insufficient to provide for expected future benefits
and expenses for that product, deferred acquisition costs will be written off
and thereafter, if required, a premium deficiency reserve will be established by
a charge to income. Changes in the assumptions for mortality, persistency,
maintenance expense and interest could result in material changes to the
financial statements.

     Our premiums earned are recorded in accordance with information received
from our ceding companies, or are estimated where this information is not
current with the reporting period. These premium estimates are based on
historical experience as adjusted for current treaty terms and other
information. Actual results could differ from these estimates. Management
monitors actual experience, and should circumstances warrant, will revise its
estimates of premiums earned.

     The development of policy reserves and amortization of deferred acquisition
costs for our products requires management to make estimates and assumptions
regarding mortality, lapse, expense and investment experience. Such estimates
are primarily based on historical experience and information provided by ceding
companies. Actual results could differ materially from those estimates.
Management monitors actual experience, and should circumstances warrant, will
revise its assumptions and the related reserve estimates.

     In the normal course of business, we acquire in-force blocks of business.
The determination of the fair value of the assets acquired and the liabilities
assumed require management to make estimates and assumptions regarding
mortality, lapse rates and expenses. These estimates are based on historical
experience, actuarial studies and information provided by the ceding companies.
Actual results could differ materially from these estimates.


                                       32

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     Present value of in-force business is established upon the acquisition of a
subsidiary and is amortized over the expected life of the business at the time
of acquisition. The amortization each year will be a function of the gross
profits or revenues each year in relation to the total gross profits or revenues
expected over the life of business, discounted at the assumed net credit rate.
The determination of the initial value and the subsequent amortization require
management to make estimates and assumptions regarding the future business
results that could differ materially from actual results. Estimates and
assumptions involved in the present value of in-force business and subsequent
amortization are similar to those necessary in the establishment of reserves and
amortization of deferred acquisition costs.

     Goodwill is established upon the acquisition of a subsidiary. Goodwill is
calculated as the difference between the price paid and the value of individual
assets and liabilities on the date of acquisition. We account for goodwill in
accordance with SFAS No. 142, "Goodwill and Other Intangible Assets". Goodwill
deemed to have an indefinite life is subject to an annual impairment test.
Goodwill recognized in the consolidated balance sheet relates to our acquisition
of Scottish Re Holdings Limited and has been tested for impairment. We have
determined that there is no impairment.

     Fixed maturity investments are evaluated for other than temporary
impairments in accordance with SFAS No. 115: "Accounting for Certain Investments
in Debt and Equity Securities", Emerging Issues Task Force 99-20: ("EITF 99-20")
"Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interest in Securitized Assets" and Emerging Issues Task Force 03-1
("EITF 03-1") "The Meaning of Other-Than-Temporary Impairments and Its
Application to Certain Investments". Under these pronouncements, realized losses
are recognized on securities if the securities are determined to be other than
temporarily impaired. Factors involved in the determination of potential
impairment include fair value as compared to amortized cost, length of time the
value has been below amortized cost, credit worthiness of the issuer, forecasted
financial performance of the issuer, position of the security in the issuer's
capital structure, the presence and estimated value of collateral or other
credit enhancement, length of time to maturity, interest rates and our intent
and ability to hold the security until the market value recovers.

     Our funds withheld at interest arise on modified coinsurance and funds
withheld coinsurance transactions. Derivatives Implementation Group Issue No.
B36 "Embedded Derivatives: Bifurcation of a Debt Instrument that Incorporates
Both Interest Rate and Credit Rate Risk Exposures that are Unrelated or Only
Partially Related to the Creditworthiness of the Issuer of that Instrument"
("DIG B36") indicates that these transactions contain embedded derivatives. The
embedded derivative feature in our funds withheld treaties is similar to a
fixed-rate total return swap on the assets held by the ceding companies. The
swap consists of two parts. The first is the market value of the underlying
asset portfolio and the second is a hypothetical loan to the ceding company. The
hypothetical loan is based on the expected cash flows of the underlying
reinsurance liability. We have developed models to systematically estimate the
value of the total return swap. The fair value of the embedded derivative is
affected by changes in expected cash flows, credit spreads of the assets and
changes in "risk-free" interest rates. The change in fair value is included in
our calculation of estimated gross profits and, therefore, also affects the
amortization of deferred acquisition costs. In addition to our quota share
indemnity funds withheld contracts, we have entered into various financial
reinsurance treaties that, although considered funds withheld, do not transfer
significant insurance risk and are recorded on a deposit method of accounting.
As a result of the experience refund provisions of these treaties the value of
the embedded derivative is currently considered immaterial. Changes in our
expectations of future cash flows could result in material changes to the
financial statements.

     Our accounting policies addressing premiums earned, reserves, deferred
acquisition costs, value of business acquired, goodwill, investment impairment
and embedded derivatives involve significant


                                       33

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


assumptions, judgments and estimates. Changes in these assumptions, judgments
and estimates could create material changes in our consolidated financial
statements.

Results of Operations

Consolidated results of operations

<TABLE>
<CAPTION>
                                              Three months ended              Nine months ended
                                        -------------------------------- -----------------------------
                                          September 30,   September 30,   September 30,  September 30,
                                              2004            2003            2004           2003
                                        --------------- ---------------- -------------- --------------
<S>                                   <C>             <C>              <C>             <C>
 Premiums earned......................  $    145,928    $     92,741     $    435,254    $   252,296
 Investment income, net...............        55,519          38,133          160,439        106,272
 Fee income...........................         2,545           2,932            8,686          7,303
 Realized gains (losses)..............        (3,398)            744           (3,664)        (4,969)
 Change in value of embedded
 derivatives..........................        (5,509)              -              456              -
                                        --------------- ---------------- -------------- --------------
 Total revenues.......................       195,085         134,550          601,171        360,902
                                        --------------- ---------------- -------------- --------------

 Claims and other policy benefits.....       104,701          69,424          322,856        177,886
 Interest credited to interest
 sensitive contract liabilities.......        27,685          33,294           77,342         66,061
 Acquisition costs and other
 insurance expenses, net..............        39,939          27,593          110,397         76,132
 Operating expenses...................        13,214           8,753           36,969         24,767
 Interest expense.....................         3,352           1,869            9,126          5,533
                                        --------------- ---------------- -------------- --------------
 Total benefits and expenses..........       188,891         140,933          556,690        350,379
                                        --------------- ---------------- -------------- --------------
 Income before income taxes and
 minority interest....................         6,194          (6,383)          44,481         10,523
 Income tax benefit...................         5,401           8,165            6,217          7,999
                                        --------------- ---------------- -------------- --------------
 Income before minority interest......        11,595           1,782           50,698         18,522
 Minority interest....................          (17)               -             (355)             -
                                        --------------- ---------------- -------------- --------------
 Income from continuing operations....        11,578           1,782           50,343         18,522
 Loss from discontinued operations....             -            (157)               -         (1,782)
                                        --------------- ---------------- -------------- --------------
 Net income...........................  $     11,578    $      1,625     $     50,343    $    16,740
                                        =============== ================ ============== ==============
</TABLE>

     Total revenues increased by 45% to $195.1 million in the quarter ended
September 30, 2004 from $134.6 million in the same period of 2003. Total
revenues include premiums earned in our Life Reinsurance Segments, investment
income on our invested assets, fee income, realized gains and losses on our
investment portfolio and derivative instruments and the change in the value of
embedded derivatives. The increase in premiums earned is primarily due to the
acquisition of Scottish Re Life Corporation and growth in the traditional
solutions line of business in our Life Reinsurance North America Segment. The
increase in investment income is due to growth in our invested assets, which
arises from business growth, and our HyCU offering and trust preferred debt
offerings in the fourth quarter of 2003 and the second quarter of 2004. Growth
in these areas has been offset by realized losses on investments and derivatives
and the change in value of embedded derivatives. The change in value of the
embedded derivatives arises from the implementation of DIG B36.

     Total benefits and expenses increased by 34% to $188.9 million in the
quarter ended September 30, 2004 from $140.9 million in the same period in 2003.
The increase was due to the acquisition of Scottish Re Life Corporation,
continued growth in our Life Reinsurance North America Segment, additional
operating costs required to meet the growth in our business, additional
operating costs necessary to meet the requirements of the Sarbanes-Oxley Act of
2002 and additional interest expense


                                       34

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


arising from the HyCU offering and trust preferred debt offerings in the fourth
quarter of 2003 and the second quarter of 2004.

     Total revenues increased by 67% to $601.2 million in the nine months ended
September 30, 2004 from $360.9 million in the same period of 2003. The increase
in premiums earned is primarily due to the acquisition of Scottish Re Life
Corporation and growth in the traditional solutions line of business in our Life
Reinsurance North America Segment. The increase in investment income is due to
growth in our invested assets, which arises from business growth, our equity
offering in July 2003, our HyCU offering and trust preferred debt offerings in
the fourth quarter of 2003 and the second quarter of 2004. Growth in this area
has been offset by realized losses on investments and derivatives.

     Total benefits and expenses increased by 59% to $556.7 million in the nine
months ended September 30, 2004 from $350.4 million in the same period in 2003.
The increase was due to the acquisition of Scottish Re Life Corporation,
continued growth in our Life Reinsurance North America Segment, additional
operating costs required to meet the growth in our business, additional
operating costs necessary to meet the requirements of the Sarbanes-Oxley Act of
2002 and additional interest expense arising from the HyCU offering and trust
preferred debt offerings in the fourth quarter of 2003 and second quarter of
2004.

     During 2003, we decided to discontinue our Wealth Management operations in
Luxembourg. We have transferred our Luxembourg Wealth Management business to
third parties, closed the Luxembourg office and are in the process of
liquidating our Luxembourg subsidiary. We have reported the results of the
Luxembourg Wealth Management activities as discontinued operations. During the
quarter ended September 30, 2003 losses from these operations amounted to
$157,000 and for the nine month period ended September 30, 2003, losses were
$1.8 million. No losses were reported in 2004.

     Earnings per ordinary share

<TABLE>
<CAPTION>
                                              Three months ended              Nine months ended
                                        -------------------------------- -----------------------------
                                          September 30,   September 30,   September 30,  September 30,
                                              2004            2003            2004           2003
                                        --------------- ---------------- -------------- --------------
<S>                                   <C>             <C>              <C>             <C>
 Income from continuing operations......   $    11,578     $      1,782    $     50,343   $     18,522
                                        =============== ================ ============== ==============
 Net income.............................   $    11,578     $      1,625    $     50,343   $     16,740
                                        =============== ================ ============== ==============
 Earnings per ordinary share from
 continuing operations - Basic..........   $      0.32     $        0.05   $       1.41   $       0.64
                                        =============== ================ ============== ==============
 Earnings per ordinary share from
 continuing operations - Diluted........   $      0.31     $        0.05   $       1.35   $       0.60
                                        =============== ================ ============== ==============
 Basic earnings per ordinary share......   $      0.32     $        0.05   $       1.41   $       0.57
                                        =============== ================ ============== ==============
 Diluted earnings per ordinary share....   $      0.31     $        0.05   $       1.35   $       0.55
                                        =============== ================ ============== ==============

 Weighted average number of ordinary
 shares outstanding:
 Basic..................................     35,869,413      33,248,670      35,648,913      29,119,913
                                        =============== ================ ============== ==============
 Diluted................................     37,244,288      35,240,768      37,268,420      30,647,580
                                        =============== ================ ============== ==============
</TABLE>


                                       35

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     Income from continuing operations for the quarter ended September 30, 2004
increased 550% to $11.6 million from $1.8 million in the same period in 2003. In
the three month period ended September 30, 2003 we incurred a charge of $12.5
million to account for revised reporting by a ceding company client in
connection with two fixed annuity reinsurance contracts. Income from continuing
operations has increased due to the acquisition of Scottish Re Life Corporation,
continued growth in our Life Reinsurance North America Segment, and an increase
in investment income primarily due to the increase in average invested assets.
These increases were offset in part by increased operating costs and interest
expense, and realized losses on our investments and derivatives and the change
in value of the embedded derivative.

     Diluted earnings per ordinary share amounted to $0.31 for the quarter ended
September 30, 2004 and $0.05 in the same period in 2003, an increase of 520%.
Diluted earnings per ordinary share increased as a result of the growth in net
income discussed above. The weighted average number of ordinary shares
outstanding, on a fully diluted basis, has increased from 35,240,768 for the
three months ended September 30, 2003 to 37,244,288 for the three months ended
September 30, 2004 principally as a result of the offering of 9,200,000 million
shares in July 2003.

     Income from continuing operations for the nine months ended September 30,
2004 increased 172% to $50.3 million from $18.5 million in the same period in
2003. In the nine months ended September 30, 2004 we incurred a change of $12.5
million to account for revised reporting by a ceding company client in
connection with two fixed annuity reinsurance contracts. Income from continuing
operations has increased due to the acquisition of Scottish Re Life Corporation,
continued growth in our Life Reinsurance North America Segment, and an increase
in investment income primarily due to the increase in average invested assets.
These increases were offset in part by increased operating costs and interest
expense and realized losses on our investments and derivatives.

     Diluted earnings per ordinary share amounted to $1.35 for the nine months
ended September 30, 2004 and $0.55 in the same period in 2003, an increase of
145%. Diluted earnings per ordinary share increased as a result of the growth in
net income discussed above. The weighted average number of ordinary shares
outstanding, on a fully diluted basis, has increased from 30,647,580 for the
nine months ended September 30, 2003 to 37,268,420 for the nine months ended
September 30, 2004 principally as a result of the offering of 9,200,000 million
shares in July 2003.


                                       36

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


Segment Operating Results

Life Reinsurance North America

<TABLE>
<CAPTION>
                                              Three months ended              Nine months ended
                                        -------------------------------- -----------------------------
                                          September 30,   September 30,   September 30,  September 30,
                                              2004            2003            2004           2003
                                        --------------- ---------------- -------------- --------------
<S>                                   <C>             <C>              <C>             <C>
Premiums earned.....................     $    119,468      $   62,446      $ 352,340      $  158,471
Investment income, net..............           53,250          34,889        151,636          97,169
Fee income..........................            1,445           2,128          5,795           4,523
Realized gains (losses).............           (1,289)            395         (1,149)         (4,656)
Change in value of embedded
derivatives.........................           (5,509)              -            456               -
                                        --------------- ---------------- -------------- --------------
Total revenues......................          167,365          99,858        509,078         255,507
                                        --------------- ---------------- -------------- --------------

Claims and other policy benefits....           88,070          46,559        266,147         118,785
Interest credited to interest
sensitive contract liabilities......           27,685          33,294         77,342          66,061
Acquisition costs and other
insurance expenses, net.............           35,374          21,634        100,611          55,900
Operating expenses..................            4,437           2,404         13,543           6,819
Interest expense....................            1,266             235          2,892             712
                                        --------------- ---------------- -------------- --------------
Total benefits and expenses.........          156,832         104,126        460,535         248,277
                                        --------------- ---------------- -------------- --------------
Income (loss) before income taxes
and minority interest...............     $     10,533      $   (4,268)     $  48,543      $    7,230
                                        =============== ================ ============== ==============
</TABLE>

     In our Life Reinsurance North America Segment we reinsure life insurance,
annuities and annuity-type products. These products are written by life
insurance companies and other financial institutions located principally in the
United States, as well as around the world. The results of Scottish Re Life
Corporation, which we acquired on December 22, 2003, are included in the results
of this segment for the quarter and nine months ended September 30, 2004.

     Premiums earned in our Life Reinsurance North America Segment during the
quarter ended September 30, 2004 increased 91% to $119.5 million in comparison
with $62.4 million in the same period in 2003. A significant portion of the
increase is due to the acquisition of Scottish Re Life Corporation, which
contributed $29.8 million in earned premiums for the quarter. The increase is
also due to increases in the amounts of life insurance in-force on existing
business and on new business written during the year. As of September 30, 2004,
we had approximately $307.4 billion of life reinsurance in force covering 7.5
million lives with an average benefit per life of $41,000 in our North American
operations. As of September 30, 2003, we had approximately $105.2 billion of
life reinsurance in force in our Life Reinsurance North America Segment covering
2.0 million lives with an average benefit per life of $53,000.

     Net investment income increased 53% to $53.3 million for the quarter ended
September 30, 2004 from $34.9 million for the same period in the prior year. The
increase is due to the growth in our average invested assets offset in part by
decreases in realized yields during 2003 and 2004. Our total invested assets
have increased significantly because of growth in our Life Reinsurance North
America Segment and our HyCU and trust preferred securities offerings in the
fourth quarter of 2003 and the second quarter


                                       37

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


of 2004. Total invested assets in this segment have increased from $3.1 billion
at September 30, 2003 to $4.4 billion at September 30, 2004.

     On the portfolio managed by our external investment managers the yields on
fixed rate assets were 5.1% and 5.3% at September 30, 2004 and 2003,
respectively. The reduction in yield was due primarily to the lower market
yields at which new cash flows were invested and proceeds of maturities and
sales were reinvested. Yields on floating rate assets are indexed to LIBOR. The
yield on our floating rate assets decreased to 3.0% as at September 30, 2004
from 3.1% as at September 30, 2003, and the yield on our cash and cash
equivalents decreased to 1.3% as at September 30, 2004 from 1.6% as at September
30, 2003. The volume of floating rate assets increased during 2003 as a result
of our investing the proceeds of floating rate funding agreements to earn a
spread over the cost of funds.

     On October 1 2003, we implemented the requirements of DIG B36 which
addresses whether SFAS No. 133 "Accounting for Derivative Instruments and
Hedging Activities" requires bifurcation of a debt instrument into a debt host
contract and an embedded derivative if the debt instrument incorporates both
interest rate risk and credit risk exposures that are unrelated or only
partially related to the creditworthiness of the issuer of that instrument.
Under DIG B36 modified coinsurance and coinsurance funds withheld reinsurance
agreements in which interest is determined by reference to a pool of fixed
maturity assets are arrangements containing embedded derivatives requiring
bifurcation. In addition, reinsurance contracts with experience refunds are also
considered to be arrangements containing embedded derivatives requiring
bifurcation. The change in value of the derivative, net of related deferred
amortization costs, during the quarter ended September 30, 2004 amounted to a
loss of $5.5 million. This change in value has arisen principally because of
decreases in risk free interest rates.

     Claims and other policy benefits increased by 89% to $88.1 million for the
quarter ended September 30, 2004 from $46.6 million in the same quarter in 2003.
The increase is a result of the acquisition of Scottish Re Life Corporation, the
increased number of clients and the increase in our traditional solutions
business from these clients in our Life Reinsurance North America Segment as
described above. Death claims are reasonably predictable over a period of many
years, but are less predictable over shorter periods and are subject to
fluctuation from quarter to quarter.

     Our targeted maximum corporate retention in our Life Reinsurance North
America Segment on any one life is $1.0 million; however, we currently retrocede
any liability in excess of $500,000. We have also arranged catastrophe cover,
which provides reinsurance for losses of approximately $29.3 million in excess
of $750,000. This catastrophe cover provides protection for terrorism, nuclear,
biological and chemical risks.

     For the quarter ended September 30, 2004, interest credited to interest
sensitive contract liabilities decreased 17% to $27.7 million from $33.3 million
in the same period in 2003. During the quarter ended September 30, 2003 we
incurred a $12.5 million charge due to revised reporting by a ceding company
client in connection with two fixed annuity reinsurance contracts. Excluding
this charge, interest credited in the 2004 third quarter increased by 39% in
comparison with the three months ended September 30, 2003. Interest credited
includes interest in respect of funding agreements. The amounts due on secured
funding agreements are included in interest sensitive contract liabilities on
our balance sheet and amount to $500.5 million at September 30, 2004 in
comparison with $170.1 million at September 30, 2003. The remaining increase is
due to interest credited on new reinsurance treaties and increases in interest
credited on existing treaties due to increasing average liability balances.
Interest sensitive contract liabilities amounted to $3.1 billion at September
30, 2004 in comparison with $2.1 billion at September 30, 2003.

     During the quarter ended September 30, 2004, acquisition costs and other
insurance expenses increased by 64% to $35.4 million from $21.6 million in the
same quarter in 2003. The increase was a


                                       38

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


result of the acquisition of Scottish Re Life Corporation and the increased life
and annuity business in our Life Reinsurance North America Segment as discussed
above. The costs of the structured finance facility described below are included
in acquisition costs and other insurance expenses.

     The components of these expenses are as follows:

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                 September 30,
                                                            -----------------------
                                                               2004         2003
                                                            ----------- -----------
                                                            (dollars in thousands)
<S>                                                       <C>         <C>
Commissions, excise taxes and other insurance expenses..    $  57,556       45,891
Deferral of expenses....................................      (39,860)    (38,280)
                                                            ----------- -----------
                                                               17,696       7,611
Amortization -- Present value of in-force business.......         343           -
Amortization -- Deferred acquisition costs...............      17,335      14,023
                                                            ----------- -----------
Total...................................................    $  35,374    $ 21,634
                                                            =========== ===========
</TABLE>

     Commissions and excise taxes vary with premiums earned. Other insurance
expenses include direct and indirect expenses of those departments involved in
the marketing, underwriting and issuing of reinsurance treaties. Of these total
expenses a portion is deferred and amortized over the life of the reinsurance
treaty or, in the case of interest sensitive contracts, in relation to the
estimated gross profits in respect of the contracts.

     Operating expenses have increased by 85% to $4.4 million in the quarter
ended September 30, 2004 from $2.4 million in the same quarter in 2003. The
increase is primarily the result of the acquisition of Scottish Re Life
Corporation and additional personnel costs incurred as we continue to grow our
business. The costs of Scottish Re Life Corporation include the cost of the
transition services agreement with GE ERC of $750,000. Total employees in this
segment have grown from 62 at September 30, 2003 to 80 at September 30, 2004.

     Interest expense in this segment arises on the trust preferred securities.
The increase in interest expense to $1.3 million in the quarter ended September
30, 2004 from $0.2 million for the same quarter in 2003, results from the
issuance of an additional $62.0 million of these securities in October 2003,
November 2003, and May 2004.

     Premiums earned in our Life Reinsurance North America Segment during the
nine months ended September 30, 2004 increased 122% to $352.3 million in
comparison with $158.5 million in the same period in 2003. A significant portion
of the increase is due to the acquisition of Scottish Re Life Corporation, which
contributed $107.6 million in earned premiums. The remaining increase is due to
the increase in the number of client ceding companies and the increase in
business from these clients in our Life Reinsurance North America Segment. As of
September 30, 2004, we had approximately $307.4 billion life reinsurance in
force covering 7.5 million lives with an average benefit per life of $41,000 in
our Life Reinsurance North America Segment. As of September 30, 2003, we had
approximately $105.2 billion of life reinsurance in force in our Life
Reinsurance North America Segment covering 2.0 million lives with an average
benefit per life of $53,000.

     Net investment income increased by 56% to $151.6 million for the nine
months ended September 30, 2004 from $97.2 million for the prior year period.
The increase is due to the growth in our average invested assets offset in part
by decreases in realized yields during 2003 and 2004.


                                       39

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     The change in value of derivatives, net of related deferred amortization
costs, during the nine months ended September 30, 2004 amounted to a gain of
$0.4 million. This change in value arose principally because of an increase in
risk free interest rates.

     Claims and other policy benefits increased by 124% to $266.1 million during
the nine months ended September 30, 2004 from $118.8 million in the same period
in 2003. The increase is a result of the acquisition of Scottish Re Life
Corporation, the increased number of clients and the increase in business from
these clients in our Life Reinsurance North America Segment as described above.
Death claims are reasonably predictable over a period of many years, but are
less predictable over shorter periods and are subject to fluctuation from period
to period.

     For the nine months ended September 30, 2004, interest credited to interest
sensitive contract liabilities increased by 17% to $77.3 million from $66.1
million in the same period in 2003. During the nine months ended September 30,
2003 we incurred $12.5 million due to revised reporting by a ceding company
client in connection with two fixed annuity reinsurance contracts. Excluding
this charge interest credited increased by 46% in comparison with the nine
months ended September 30, 2003. Interest credited includes interest in respect
of funding agreements. The amounts due on funding agreements are included in
interest sensitive contract liabilities on our balance sheet and amount to
$500.5 million at September 30, 2004 in comparison with $170.1 million at
September 30, 2003. The remaining increase is due to interest credited on new
reinsurance treaties and increases in interest credited on existing treaties due
to increasing average liability balances. Interest sensitive contract
liabilities amounted to $3.1 billion at September 30, 2004 in comparison with
$2.1 billion at September 30, 2003.

     During the nine months ended September 30, 2004 acquisition costs and other
insurance expenses increased by 80% to $100.6 million from $55.9 million in the
same period in 2003. The increase was a result of the acquisition of Scottish Re
Life Corporation and the increased life and annuity business in our Life
Reinsurance North America Segment as discussed above. The costs of the
structured finance facility described below are included in acquisition costs
and other insurance expenses.

     The components of these expenses are as follows:

<TABLE>
<CAPTION>
                                                               Nine Months Ended
                                                                 September 30,
                                                            -----------------------
                                                               2004         2003
                                                            ----------- -----------
                                                            (dollars in thousands)
<S>                                                       <C>          <C>
Commissions, excise taxes and other insurance expenses..     $202,205    $130,890
Deferral of expenses....................................     (157,807)   (110,248)
                                                            ----------- -----------
                                                               44,398      20,642
Amortization -- Present value of in-force business.......       2,536           -
Amortization -- Deferred acquisition costs...............      53,677      35,258
                                                            ----------- -----------
Total...................................................     $100,611    $ 55,900
                                                            =========== ===========
</TABLE>

     Operating expenses increased by 99% to $13.5 million during the nine months
ended September 30, 2004 from $6.8 million in the same period in 2003. The
increase is primarily the result of the acquisition of Scottish Re Life
Corporation and additional personnel costs incurred as we continue to grow our
business. The costs of Scottish Re Life Corporation include the cost of the
transition services agreement with GE ERC of $2.4 million. Total employees in
this segment have grown from 62 at September 30, 2003 to 80 at September 30,
2004.


                                       40

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


        Interest expense in this segment arises on the trust preferred
securities. The increase in interest expense to $2.9 million for the nine months
ended September 30, 2004 from $0.7 million in the same period in 2003, results
from the issuance of an additional $62.0 million of these securities in October
2003, November 2003, and May 2004.

 Life Reinsurance International

<TABLE>
<CAPTION>
                                           Three months ended               Nine months ended
                                    ----------------------------------------------------------------
                                     September 30,   September 30,   September 30,    September 30,
                                          2004            2003            2004            2003
                                    --------------- --------------- ---------------- ---------------
<S>                                <C>             <C>             <C>              <C>
 Premiums earned...................   $   26,460     $   30,295       $   82,914       $  93,825
 Investment income, net............        2,105          1,860            7,828           5,604
 Realized gains (losses)...........           67            (89)            (273)           (962)
                                    --------------- --------------- ---------------- ---------------
 Total revenues....................       28,632         32,066           90,469          98,467
                                    --------------- --------------- ---------------- ---------------

 Claims and other policy benefits..       16,631         22,865           56,709          59,101
 Acquisition costs and other
 insurance expenses, net...........        4,115          5,355            8,097          18,576

 Operating expenses................        4,941          3,584           13,107           9,425
                                    --------------- --------------- ---------------- ---------------
 Total benefits and expenses.......       25,687         31,804           77,913          87,102
                                    --------------- --------------- ---------------- ---------------
 Income before income taxes and
 minority interest.................   $    2,945     $      262       $   12,556       $  11,365
                                    =============== =============== ================ ===============
</TABLE>

     Our Life Reinsurance International Segment specializes in niche markets in
developed countries and broader life insurance markets in the developing world
and focuses on the reinsurance of short term group life policies and aircrew
"loss of license" insurance.

     Premiums earned in our Life Reinsurance International Segment during the
quarter ended September 30, 2004 decreased 14% to $26.4 million in comparison
with $30.3 million in the same period in 2003. Premiums earned from a portfolio
acquired in 2002 were $2.1 million lower in the quarter ended September 30, 2004
compared to the same period in the prior year due to the run off nature of the
portfolio. Other life reinsurance reported earned premium decreased by 1% in the
quarter ended September 30, 2004 to $ 16.6 million in comparison with $16.7
million in the same period in 2003. Earned premium for general reinsurance
business, which consists of aircrew loss of license and related personal
accident, decreased 21% from $7.6 million to $6.0 million. The majority of
business in our Life Reinsurance International Segment is in respect of short
duration contracts. We have experienced considerable reporting delays from some
of our cedents on this business. In prior years premiums earned in this segment
were subject to variation from quarter to quarter because of the reporting
delays. As part of the implementation of this segment's new administrative
system, improved data has been compiled which has allowed us to more accurately
estimate our premium earned. During the year to date we have decided not to
renew certain contracts, which do not meet our required return thresholds.

     Investment income for the quarter ended September 30, 2004 has increased to
$2.1 million compared to $1.9 million for the same period in 2003. The increase
is due to the increased level of invested assets arising principally from growth
in business.

     Claims and other policy benefits in our Life Reinsurance International
Segment decreased to $16.6 million in the quarter ended September 30, 2004 from
$22.9 million in the same quarter in 2003. Claims from a portfolio acquired in
2002 were $1.6 million lower in the quarter ended September 30,


                                       41

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


2004 compared to the same quarter in the prior year due to the run off nature of
the portfolio. Claims in the current quarter, compared to the same quarter in
2003, have been impacted by the introduction of the estimates process described
above.

     During the quarter ended September 30, 2004, acquisition costs and other
insurance expenses decreased by $1.2 million or 23% to $4.1 million from $5.4
million in the same period in 2003. Acquisition costs have also been impacted by
the estimate process described above.

     Operating expenses have increased by 36% for the quarter ended September
30, 2004 to $4.9 million from $3.6 million in the prior year period. The
increase is principally related to personnel costs. Additional resources have
been added as we continue to grow our business. Additional costs have been
incurred due to the amortization of a new administration system. Operating
expenses in this segment are incurred in pounds sterling. These expenses have
increased as a result of the depreciation of the United States dollar in
comparison with pounds sterling.

     Premiums earned in our Life Reinsurance International Segment during the
nine months ended September 30, 2004 decreased 12% to $82.9 million in
comparison with $93.8 million in the same period in 2003. Premiums earned from a
portfolio acquired late in 2002 were $5.0 million lower in the first nine months
of 2004 compared to the same period in the prior year due to the run off nature
of the portfolio. Other life reinsurance reported earned premium decreased by 7%
in the nine months ended September 30, 2004 to $47.2 million in comparison
with $50.9 million in 2003. Earned premium for general reinsurance business,
which consists of aircrew loss of license and related personal accident,
decreased 9% from $23.3 million to $21.1 million. The majority of business in
our Life Reinsurance International Segment is in respect of short duration
contracts. We have experienced considerable reporting delays from some of our
cedents on this business. In prior years premiums earned in this segment were
subject to variation from quarter to quarter because of the reporting delays. As
part of the implementation of this segment's new administrative system, improved
data has been compiled which has allowed us to more accurately estimate our
premium earned.

     Investment income during the nine months ended September 30, 2004 has
increased to $7.8 million compared to $5.6 million for the same period in 2003.
The agreements for the acquisition of a portfolio of business completed late in
2002 included conditions for recapture of certain business by the ceding
company. This recapture has now been completed and has resulted in additional
investment income of $1.1 million in the nine month period ended September 30,
2004. The remainder of the increase is due to the increased level of invested
assets arising principally from growth in business.

     Claims and other policy benefits in our Life Reinsurance International
Segment decreased by 4% to $56.7 million in the nine months ended September 30,
2004 from $59.1 million in the same period in 2003. Claims in the current nine
month period, compared to the same period in 2003, have been impacted by the
introduction of the estimates process described above. During the current nine
month period we have recognized claims and other policy benefits of $1.8 million
in respect of the recapture of business on the portfolio acquisition described
above. In addition during the period we incurred $1.0 million in respect of a
claim from our stop loss business. Claims and other policy benefits in the prior
year were favorably impacted by a $3.4 million release of reserves on the sale
of our unit linked business in 2003.

     During the nine months ended September 30, 2004 acquisition costs and other
insurance expenses decreased by $10.5 million or 56% to $8.1 million from $18.6
million in the same period in 2003. Acquisition costs for a portfolio acquired
in late 2002 are $2.0 million lower due to the run off nature of the portfolio.
Acquisition costs have also been impacted by the estimate process described
above. Acquisition costs includes the amortization of the present value of
in-force business. This is $1.9 million lower in the nine month period of 2004
compared to the same period of 2003 primarily due to the sale of


                                       42

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


the unit linked business in the second quarter of 2003. In the current year we
recognized a commission due of $1.8 million arising from a run off book of
business.

     Operating expenses have increased by 39% to $13.1 million for the nine
months ended September 30, 2004 from $9.4 million in the prior year period. The
increase is principally related to personnel costs. Additional resources have
been added as we continue to grow our business. The increased personnel costs
include costs for recruitment expenses. Other expense increases compared to 2003
include office costs due to the move to larger offices in the second quarter of
2003 and amortization of the costs of a new administration system. Operating
expenses in this segment are incurred in pounds sterling. These expenses have
increased as a result of the depreciation of the United States dollar in
comparison with pounds sterling.

Other

<TABLE>
<CAPTION>
                                           Three months ended               Nine months ended
                                    ----------------------------------------------------------------
                                     September 30,   September 30,   September 30,    September 30,
                                          2004            2003            2004            2003
                                    --------------- --------------- ---------------- ---------------
<S>                                <C>             <C>             <C>              <C>
Investment income, net.............    $    164       $    1,384      $     975        $    3,499
Fee income.........................       1,100              804          2,891             2,780
Realized gains (losses)............      (2,176)             438         (2,242)              649
                                    --------------- --------------- ---------------- ---------------
Total revenues.....................        (912)           2,626          1,624             6,928
                                    --------------- --------------- ---------------- ---------------

Acquisition costs and other
insurance expenses, net............         450              604          1,689             1,656
Operating expenses.................       3,836            2,765         10,319             8,523
Interest expense...................       2,086            1,634          6,234             4,821
                                    --------------- --------------- ---------------- ---------------
Total benefits and expenses........       6,372            5,003         18,242            15,000
                                    --------------- --------------- ---------------- ---------------
Loss before income taxes and
minority interest..................    $ (7,284)      $   (2,377)     $ (16,618)       $   (8,072)
                                    =============== =============== ================ ===============
</TABLE>

     The Other Segment comprises revenues and expenses not included elsewhere
and includes corporate overhead. As previously discussed our Wealth Management
operations, which were previously designated as a separate segment, are now
included in the Other Segment.

     Investment income arises in the Other Segment on capital not specifically
allocated to the Life Reinsurance North America or Life Reinsurance
International Segments. Investment income in the three months and nine months
ended September 30, 2004 has decreased due to the additional deployment of
capital to our operating subsidiaries. Fee income and acquisition expenses arise
from our Wealth Management operations. Operating expenses include the costs of
running our principal office in Bermuda, compensation costs for our board of
directors and legal and professional fees including those in respect of
corporate governance legislation. Operating expenses have increased by 40% to
$3.8 million for the quarter ended September 30, 2004 and 21% to $10.3 million
for the nine months ended September 30, 2004. These increases relate primarily
to increased personnel costs and the costs of corporate governance initiatives,
including the Sarbanes Oxley Act of 2002.

     For the quarter ended September 30, 2004, interest expense has increased by
28% to $2.1 million from $1.6 million for the same period in 2003 as a result of
the HyCU issuance in December 2003. For the nine months ended September 30,
2004, interest expense has increased by 29% to $6.2 million from $4.8 million
for the same period in 2003.


                                       43

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


Realized gains (losses)

     During the quarter ended September 30, 2004, realized losses amounted to
$3.4 million in comparison with a gain of $0.7 million in the same period in
2003.

     Included in realized losses for the current quarter is $2.2 million
resulting from the mark to market of an interest rate swap contract. We entered
into this contract in relation to certain of our investment assets not
supporting reinsurance liabilities. This derivative has not been designated as a
hedge and accordingly changes in the fair value are recorded in the
determination of net income. During the quarter ended September 30, 2004, we
recognized losses of $1.2 million in respect of impairments on the portfolio
controlled by us.

     During the nine months ended September 30, 2004, realized losses amounted
to $3.7 million in comparison with realized losses of $5.0 million in the same
period in 2003. Included in realized losses is $2.2 million resulting from the
mark to market of an interest rate swap as described above. During the nine
months ended September 30, 2004, we recognized losses of $3.2 million in respect
of impairments on the portfolio controlled by us. These losses were offset by
net realized gains on the portfolio.

     The losses in the nine months ended September 30, 2003 consist of
investment losses on unit linked securities of $1.0 million, impairments of $5.7
million on the portfolio controlled by us and impairment losses of $1.1 million
on contracts written under modified coinsurance agreements. These losses were
partially offset by net realized gains on the sales of fixed maturity
investments.

     Management reviews securities with material unrealized losses and tests for
"other than temporary impairments" on a quarterly basis. Factors involved in the
determination of impairment include fair value as compared to amortized cost,
length of time the value has been below amortized cost, credit worthiness of the
issuer, forecasted financial performance of the issuer, position of the security
in the issuer's capital structure, the presence and estimated value of
collateral or other credit enhancement, length of time to maturity, interest
rates and our intent and ability to hold the security until the market value
recovers. We review all investments with fair values less than amortized cost,
and pay particular attention to those that have traded continuously at less than
80% of amortized cost for at least six months or 90% of amortized cost for at
least 12 months, as well as other assets with material differences between
amortized cost and fair value. Investments meeting those criteria are analyzed
in detail for "other than temporary impairment". When a decline is considered
to be "other than temporary", a realized loss is incurred and the cost basis of
the impaired asset is adjusted to its fair value.

     Under EITF 99-20, a decline in fair value below "amortized cost" basis is
considered to be an "other than temporary impairment" whenever there is an
adverse change in the amount or timing of cash flow to be received, regardless
of the resulting yield, unless the decrease is solely a result of changes in
market interest rates.


                                       44

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     The following tables provide details of the sales proceeds, realized loss,
the length of time the security had been in an unrealized loss position and
reason for sale for securities sold at a loss during the periods ended September
30, 2004 and 2003.

<TABLE>
<CAPTION>
                                   Three months ended September 30, 2004
                      ---------------------------------------------------------------
                        Credit Concern           Other                  Total
                      ------------------ --------------------- ----------------------
Days                   Proceeds   Loss     Proceeds     Loss     Proceeds     Loss
                      ---------- ------- ------------ -------- ----------- ----------
<S>                  <C>        <C>    <C>          <C>      <C>         <C>
                                          (dollars in thousands)
0-90...............      $  250  $  (84)    $ 9,556    $ (377)   $ 9,806    $  (461)
91-180.............         105     (45)      3,796       (57)     3,901       (102)
181-270............           -       -           -         -          -          -
271-360............           -       -         187       (15)       187        (15)
Greater than 360...           -       -         388       (33)       388        (33)
                      ---------- ------- ------------ -------- ----------- ----------
Total..............      $  355  $ (129)    $13,927    $ (482)   $14,282    $  (611)
                      ========== ======= ============ ======== =========== ==========

                                   Three months ended September 30, 2003
                      ---------------------------------------------------------------
                        Credit Concern           Other                  Total
                      ------------------ --------------------- ----------------------
Days                   Proceeds   Loss     Proceeds     Loss     Proceeds     Loss
                      ---------- ------- ------------ -------- ----------- ----------
                                          (dollars in thousands)
0-90...............     $     -  $    -     $17,657    $ (180)   $17,657    $  (180)
91-180.............         100     (83)      2,108       (10)     2,208        (93)
181-270............           -       -         279        (2)       279         (2)
271-360............           -       -         479       (55)       479        (55)
Greater than 360...       1,577    (765)      1,380      (116)     2,957       (881)
                      ---------- ------- ------------ -------- ----------- ----------
Total..............     $ 1,677  $ (848)    $21,903    $ (363)   $23,580    $(1,211)
                      ========== ======= ============ ======== =========== ==========

                                    Nine months ended September 30, 2004
                      ---------------------------------------------------------------
                        Credit Concern           Other                  Total
                      ------------------ --------------------- ----------------------
Days                   Proceeds   Loss     Proceeds     Loss     Proceeds     Loss
                      ---------- ------- ------------ -------- ----------- ----------
                                          (dollars in thousands)
0-90...............   $    250   $  (84)  $ 112,405   $ (2,596) $ 112,655   $ (2,680)
91-180.............      1,909     (136)     29,426       (311)    31,335       (447)
181-270............      3,216     (106)        494        (15)     3,710       (121)
271-360............          -        -       2,374        (41)     2,374        (41)
Greater than 360...      5,060     (548)        388        (33)     5,448       (581)
                      ---------- ------- ------------ -------- ----------- ----------
Total..............   $ 10,435   $ (874)  $ 145,087   $ (2,996) $ 155,522   $ (3,870)
                      ========== ======= ============ ======== =========== ==========
</TABLE>


                                       45

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


<TABLE>
<CAPTION>
                                    Nine months ended September 30, 2003
                      ---------------------------------------------------------------
                        Credit Concern           Other                  Total
                      ------------------ --------------------- ----------------------
Days                   Proceeds   Loss     Proceeds     Loss     Proceeds     Loss
                      ---------- ------- ------------ -------- ----------- ----------
                                           (dollars in thousands)
<S>                  <C>        <C>      <C>         <C>       <C>        <C>
0-90...............   $      -   $     -   $  20,133   $ (183)  $  20,133   $   (183)
91-180.............      3,529      (295)      2,108      (10)      5,637       (305)
181-270............      1,200      (241)        279       (2)      1,479       (243)
271-360............          -         -         479      (55)        479        (55)
Greater than 360...      3,051      (778)      1,380     (116)      4,431       (894)
                      ---------- ------- ------------ -------- ----------- ----------
Total..............   $  7,780   $(1,314)  $  24,379   $ (366)  $  32,159   $ (1,680)
                      ========== ======= ============ ======== =========== ==========
</TABLE>

Financial Condition

Investments

     At September 30, 2004, the portfolio controlled by us consisted of $3.1
billion of fixed income securities, preferred stock and cash. The majority of
these assets are traded; however, $285.5 million represent investments in
private securities. Of the total portfolio controlled by us, $2.9 billion
represented the fixed income and preferred stock portfolios managed by external
investment managers and $153.5 million represented other cash balances. At
December 31, 2003, the portfolio controlled by us consisted of $2.4 billion of
fixed income securities, preferred stock and cash. The majority of these assets
are traded; however, $175.2 million represented investments in private
securities. Of the total portfolio, $2.1 billion represented the fixed income
and preferred stock portfolio managed by external investment managers and $262.7
million represented other cash balances.

     At September 30, 2004, the average Standard & Poor's rating of that
portfolio was "AA-", the average effective duration was 3.3 years and the
average book yield was 4.3% as compared with an average rating of "AA-", an
average effective duration 3.9 years and an average book yield of 4.5% at
December 31, 2003. At September 30, 2004, the unrealized appreciation on
investments, net of tax, was $23.6 million as compared with unrealized
appreciation on investments, net of tax, of $16.8 million at December 31, 2003.
The unrealized appreciation on investments is included in our consolidated
balance sheet as part of shareholders' equity.

     In the table below are the total returns earned by our portfolio for the
three months ended September 30, 2004, compared to the returns earned by three
indices: the Lehman Brothers Global Bond Index, the S&P 500, and a customized
index that we developed with General Re New England Asset Management ("NEAM"),
an external investment manager, to take into account our investment guidelines.
We believe that this customized index is a more relevant benchmark for our
portfolio's performance.

                                                             September 30, 2004
                                                             ------------------
          Portfolio performance............................         2.1%
          Customized index.................................         2.6%
          Lehman Brothers Global Bond Index................         3.4%
          S&P 500..........................................        (1.9)%


                                       46

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     The following table presents the investment portfolio (market value) credit
exposure by category as assigned by Standard & Poor's.

<TABLE>
<CAPTION>
                                                   September 30, 2004     December 31, 2003
                                                 ---------------------  --------------------
       Ratings                                      $ in                  $ in
       -------                                    millions       %      millions       %
                                                 ----------- ---------  ---------- ---------
<S>                                             <C>         <C>       <C>         <C>
       AAA......................................  $ 1,109.2      36.0%  $   785.4      32.7%
       AA.......................................      395.5      12.9       298.4      12.4
       A........................................      962.3      31.3       762.7      31.7
       BBB......................................      580.3      18.9       540.8      22.5
       BB or below..............................       28.8       0.9        16.6       0.7
                                                 ----------- ---------  ---------- ---------
       Total....................................  $ 3,076.1     100.0%  $ 2,403.9     100.0%
                                                 =========== =========  ========== =========

     The following table illustrates the investment portfolio (market value) sector exposure.

                                                   September 30, 2004    December 31, 2003
                                                 ---------------------  --------------------
       Sector                                       $ in                  $ in
       ------                                     millions       %      millions       %
                                                 ----------- ---------  ---------- ---------

       U.S. Treasury securities and U.S.
          government agency obligations.......    $     45.4      1.4%  $     74.6      3.1%
       Corporate securities...................      1,106.5       36.0    1,119.6       46.6
       Municipal bonds........................         14.9        0.5        1.8        0.1
       Mortgage and asset backed securities...      1,630.7       53.0      818.7       34.0
       Preferred stock........................        125.1        4.1      126.5        5.3
                                                 ----------- ---------  ---------- ---------
                                                    2,922.6       95.0    2,141.2       89.1
       Cash...................................        153.5        5.0      262.7       10.9
                                                 ----------- ---------  ---------- ---------
       Total..................................     $3,076.1     100.0%   $2,403.9     100.0%
                                                 =========== =========  ========== =========
</TABLE>

     The data in the tables above exclude other investments and assets held by
ceding insurers under modified coinsurance agreements.

     At September 30, 2004, our fixed income portfolio had 1,678 positions and
$14.0 million of gross unrealized losses. No single position had an unrealized
loss greater than $2.2 million. There were $45.5 million of unrealized gains on
the remainder of the portfolio. There were 38 private securities in an
unrealized loss position totaling $0.5 million. At December 31, 2003, our fixed
income portfolio had 1,375 positions and $14.6 million of gross unrealized
losses. No single position had an unrealized loss greater than $1.6 million.
There were $37.0 million of unrealized gains on the remainder of the portfolio.
There were 34 private securities in an unrealized loss position totaling $0.8
million.


                                       47

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     The composition by category of securities that have an unrealized loss at
September 30, 2004 and December 31, 2003 are presented in the tables below.

<TABLE>
<CAPTION>
                                                             September 30, 2004
                                               ---------------------------------------------
                                                Estimated                Unrealized
                                                Fair Value       %          Loss          %
                                               -----------   ---------  ---------- ---------
                                                            Dollars in thousands
<S>                                         <C>            <C>         <C>       <C>
Corporate securities........................  $   258,826       27.1%   $ (2,815)    20.1%
Other structured securities.................      395,848       41.4      (7,871)    56.3
Collateralized mortgage obligations.........      163,650       17.1      (1,458)    10.4
Preferred stock.............................       42,979        4.5        (902)     6.5
Mortgage backed securities..................       67,434        7.1        (755)     5.4
Governments.................................       20,037        2.1         (76)     0.6
Municipal bonds.............................        6,858        0.7         (96)     0.7
                                               -----------   ---------  ---------- ---------
Total.......................................  $   955,632      100.0%   $(13,973)   100.0%
                                               ===========   =========  ========== =========

                                                               December 31, 2003
                                               ---------------------------------------------
                                                Estimated                Unrealized
                                                Fair Value       %          Loss          %
                                               -----------   ---------  ---------- ---------
                                                              Dollars in thousands
Corporate securities..................          $ 223,555       41.4%   $ (3,823)    26.2%
Other structured securities...........            154,065       28.5      (8,943)    61.3
Collateralized mortgage obligations...             95,455       17.7        (863)     5.9
Governments...........................             25,838        4.8        (400)     2.7
Preferred stock.......................             21,303        3.9        (299)     2.1
Mortgage backed securities............             19,900        3.7        (255)     1.8
                                               -----------   ---------  ---------- ---------
Total.................................          $ 540,116      100.0%   $(14,583)   100.0%
                                               ===========   =========  ========== =========
</TABLE>


                                       48

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


        The following tables provide information on the length of time
securities have been continuously in an unrealized loss position:

<TABLE>
<CAPTION>
                                                    September 30, 2004
                           ----------------------------------------------------------------------
                                                    Estimated              Unrealized
       Days                Book Value       %       Fair Value      %         Loss         %
      ------               ------------ --------- -------------- -------- ------------- ---------
                                                   Dollars in thousands
<S>                      <C>            <C>        <C>          <C>        <C>         <C>
       0-90..............     $358,312      37.0%    $356,296      37.3%     $(2,016)     14.4%
       91-180............      375,674      38.7      372,314      39.0       (3,360)      24.0
       181-270...........      129,258      13.3      124,664      13.0       (4,594)      32.9
       271-360...........       19,880       2.1       19,625       2.1         (255)       1.8
       Greater than 360..       86,481       8.9       82,733       8.6       (3,748)      26.9
                           ------------ --------- -------------- -------- ------------- ---------
       Total.............     $969,605     100.0%    $955,632     100.0%    $(13,973)     100.0%
                           ============ ========= ============== ======== ============= ==========

                                                     December 31, 2003
                           ----------------------------------------------------------------------
                                                    Estimated              Unrealized
       Days                Book Value       %       Fair Value      %         Loss         %
      ------               ------------ --------- -------------- -------- ------------- ---------
                                                   Dollars in thousands
       0-90..............    $ 308,267      55.6%    $304,511      56.4%    $ (3,756)      25.8%
       91-180............      115,702      20.9      113,405      21.0       (2,297)      15.8
       181-270...........       56,362      10.1       55,243      10.2       (1,119)       7.7
       271-360...........       13,486       2.4       13,064       2.4         (422)       2.9
       Greater than 360..       60,882      11.0       53,893      10.0       (6,989)      47.8
                           ------------ --------- -------------- -------- ------------- ---------
       Total.............    $ 554,699     100.0%    $540,116     100.0%    $(14,583)     100.0%
                           ============ ========= ============== ======== ============= ==========
</TABLE>

     Unrealized losses on securities that have been in an unrealized loss
position for periods greater than 2 years amounted to $2.4 million at September
30, 2004 and $2.0 million at December 31, 2003. Unrealized losses on
non-investment grade securities amounted to $1.8 million and $3.0 million at
September 30, 2004 and December 31, 2003, respectively. Of these amounts,
non-investment grade securities with unrealized losses of $1.2 million at
September 30, 2004 and $1.8 million at December 31, 2003 had been in an
unrealized loss position for a period greater than one year, of which $1.2
million at September 30, 2004 and $0.9 million at December 31, 2003 had been in
an unrealized loss position for periods greater than 2 years.


                                       49

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     The following tables illustrate the industry analysis of the unrealized
losses at September 30, 2004 and December 31, 2003.

<TABLE>
<CAPTION>
                                                    September 30, 2004
                           ----------------------------------------------------------------------
                            Amortized               Estimated              Unrealized
                              Cost          %       Fair Value      %         Loss         %
                           ------------ --------- -------------- -------- ------------- ---------
 Industry                                              Dollars in thousands
----------
<S>                      <C>            <C>        <C>          <C>        <C>         <C>
 Mortgage and asset
   backed securities...... $   637,016     65.7%   $   626,932     65.6%     $(10,084)    72.2%
 Banking..................      70,539      7.3         69,671      7.3          (868)     6.2
 Communications...........      29,004      3.0         28,547      3.0          (457)     3.3
 Financial other .........      26,395      2.7         26,003      2.7          (392)     2.8
 Electric.................      22,315      2.3         22,191      2.3          (124)     0.9
 Brokerage................      21,964      2.3         21,789      2.3          (175)     1.3
 Supranationals...........      18,495      1.9         18,251      1.9          (244)     1.7
 Other....................     143,877     14.8        142,248     14.9        (1,629)    11.6
                           ------------ --------- -------------- -------- ------------- ---------
 Total.................... $   969,605    100.0%   $   955,632    100.0%     $(13,973)   100.0%
                           ============ ========= ============== ======== ============= =========

                                                     December 31, 2003
                           ----------------------------------------------------------------------
                            Amortized               Estimated              Unrealized
                              Cost          %       Fair Value      %         Loss         %
                           ------------ --------- -------------- -------- ------------- ---------
 Industry                                              Dollars in thousands
----------
 Mortgage and asset
   backed securities...... $   279,481     50.4%   $   269,420     49.9%  $   (10,061)    69.0%
 Banking..................      38,738      7.0         38,201      7.1          (537)     3.7
 Consumer non-cyclical....      23,009      4.1         22,632      4.2          (377)     2.6
 Communications...........      27,401      4.9         27,055      5.0          (346)     2.4
 Financial companies......      21,900      3.9         21,539      4.0          (361)     2.5
 Insurance................      17,467      3.1         17,289      3.2          (178)     1.2
 Transportation...........       7,382      1.3          6,534      1.2          (848)     5.8
 Other....................     139,321     25.3        137,446     25.4        (1,875)    12.8
                           ------------ --------- -------------- -------- ------------- ---------
 Total.................... $   554,699    100.0%   $   540,116    100.0%  $   (14,583)   100.0%
                           ============ ========= ============== ======== ============= =========


     The expected maturity dates of securities that have an unrealized loss at
September 30, 2004 and December 31, 2003 are presented in the table below.

                                                         September 30, 2004
                                ----------------------------------------------------------------------
                                 Amortized               Estimated              Unrealized
                                   Cost          %       Fair Value      %         Loss         %
                                ------------ --------- -------------- -------- ------------- ---------
Maturity                                              Dollars in thousands
----------
Due in one year or less......   $   113,510     11.7%   $   111,714      11.7%  $   (1,796)    12.9%
Due in one through five years       510,782     52.7        506,167      53.0       (4,615)    33.0
Due in five through ten years       253,898     26.2        247,928      25.9       (5,970)    42.7
Due after ten years..........        91,415      9.4         89,823       9.4       (1,592)    11.4
                                ------------ --------- -------------- -------- ------------- ---------
Total........................   $   969,605    100.0%   $   955,632     100.0%  $  (13,973)   100.0%
                                ============ ========= ============== ======== ============= =========
</TABLE>


                                       50

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


<TABLE>
<CAPTION>
                                                            December 31, 2003
                                ----------------------------------------------------------------------
                                                        Estimated               Unrealized
   Maturity                      Book Value      %      Fair Value        %         Loss        %
 -----------                    ------------ --------- -------------- -------- ------------- ---------
                                                           Dollars in thousands
<S>                            <C>          <C>       <C>           <C>       <C>          <C>
   Due in one year or less...... $   57,518     10.4%    $  57,129      10.6%   $     (389)    2.7%
   Due in one through five years    220,835     39.8       214,836      39.8        (5,999)    41.1
   Due in five through ten years    232,231     41.9       225,844      41.8        (6,387)    43.8
   Due after ten years..........     44,115      7.9        42,307       7.8        (1,808)    12.4
                                ------------ --------- -------------- -------- ------------- ---------
   Total........................ $  554,699    100.0%    $ 540,116     100.0%   $  (14,583)   100.0%
                                ============ ========= ============== ======== ============= =========
</TABLE>

     At September 30, 2004, there were 599 securities with unrealized loss
positions with no security having an unrealized loss greater than $2.2 million.
At December 31, 2003, there were 409 securities with unrealized loss positions
with 2 securities having an unrealized loss greater than $1.0 million. These
were securitized assets, were tested for impairment and satisfied the impairment
tests at December 31, 2003. The increase in the number of securities with
unrealized losses is primarily attributable to increases in interest rates.

     At September 30, 2004, there were five securities with fair values that
traded continuously at less than 80% of amortized cost for at least six months
or 90% of amortized cost for at least 12 months. The total unrealized loss on
these securities amounted to $4.1 million and the largest unrealized loss
position was $2.2 million. At December 31, 2003 there were 12 securities with
fair values that traded continuously at less than 80% of amortized cost for at
least six months or 90% of amortized cost for at least 12 months. The total
unrealized loss on these securities amounted to $7.2 million and the largest
unrealized loss position was $1.6 million.

Funds withheld at interest

     Funds withheld at interest arise on contracts written under modified
coinsurance agreements. In each case, the business reinsured consists of fixed
deferred annuities. In substance, these agreements are identical to coinsurance
treaties except that the ceding company retains control of and title to the
assets. The deposits paid to the ceding company by the underlying policyholders
are held in a segregated portfolio and managed by the ceding company or by
investment managers appointed by the ceding company. These treaties transfer a
quota share of the risks. The funds withheld at interest represent our share of
the ceding companies' statutory reserves. The cash flows exchanged with each
monthly settlement are netted and include, among other items, our quota share of
investment income on our proportionate share of the portfolio, realized losses,
realized gains (amortized to reflect the statutory rules relating to interest
maintenance reserve), interest credited and expense allowances.

     At September 30, 2004 and December 31, 2003, funds withheld at interest
were in respect of six fixed annuity reinsurance contracts with three ceding
companies. At both September 30, 2004 and December 31, 2003, we had three
contracts with Lincoln National Insurance Company that accounted for $1.3
billion (86)% of the funds withheld balances. The other contracts are with
Illinois Mutual Insurance Company and American Founders Life Insurance Company.
Lincoln National Insurance Company has financial strength ratings of "A+" from
A.M. Best, "AA-" from Standard & Poor's, "Aa3" from Moody's and "AA" from Fitch.
In the event of insolvency of the ceding companies on these arrangements we
would need to exert a claim on the assets supporting the contract liabilities.
However, the risk of loss is mitigated by our ability to offset amounts owed to
the ceding company, which are included in interest sensitive contract
liabilities, with the amounts owed to us by the ceding company. Interest
sensitive contract liabilities relating to these fixed annuity reinsurance
contracts amounted to $1.8 billion and $1.7 billion at September 30, 2004 and
December 31, 2003, respectively.


                                       51

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     At September 30, 2004, funds withheld at interest totaled $1.5 billion with
an average rating of "A-", an average effective duration of 4.8 years and an
average book yield of 6.2% as compared with an average rating of "A-", an
average effective duration of 5.1 years and an average book yield of 6.3% at
December 31, 2003. These are fixed income investments and include marketable
securities, commercial mortgages, private placements and cash. The market value
of the funds withheld amounted to $1.5 billion and $1.6 billion at September 30,
2004 and at December 31, 2003, respectively.

     According to data provided by our ceding companies, the following table
reflects the market value of assets backing the funds withheld at interest
portfolio using the lowest rating assigned by the three major rating agencies.

<TABLE>
<CAPTION>
                                              September 30, 2004         December 31, 2003
                                            -----------------------   -----------------------
        Ratings                             $ in millions      %      $ in millions      %
        -------                             -------------- --------   -------------- --------
<S>                                        <C>            <C>        <C>            <C>
        AAA...............................  $      223.2      14.5%         $216.6      13.9%
        AA................................          72.6       4.7            76.9       4.9
        A.................................         517.9      33.7           528.6      34.0
        BBB...............................         527.9      34.4           537.6      34.6
        BB or below.......................          64.0       4.2            66.0       4.3
                                            -------------- --------   -------------- --------
                                                 1,405.6      91.5         1,425.7      91.7
        Commercial mortgage loans.........         130.3       8.5           129.4       8.3
                                            -------------- --------   -------------- --------
        Total.............................  $    1,535.9     100.0%      $ 1,555.1     100.0%
                                            ============== ========   ============== ========

        According to data provided by our ceding companies, the following table
reflects the market value of assets backing the funds withheld at interest
portfolio by sector.


                                               September 30, 2004        December 31, 2003
                                            -----------------------   -----------------------
        Sector                              $ in millions      %      $ in millions      %
        ------                              -------------- --------   -------------- --------
        U.S. Treasury securities and
          U.S. government agency
          obligations..................     $       35.2       2.3%      $    32.0       2.1%
        Corporate securities...........          1,021.1      66.5         1,041.2      67.0
        Municipal bonds................             24.5       1.6            23.1       1.5
        Mortgage and asset backed
          securities...................            320.2      20.8           329.4      21.1
        Commercial mortgage loans......            130.3       8.5           129.4       8.3
        Cash...........................              4.6       0.3             -          -
                                            -------------- --------   -------------- --------
        Total.............................  $    1,535.9     100.0%      $ 1,555.1     100.0%
                                            ============== ========   ============== ========
</TABLE>

Liquidity and Capital Resources

Cash flow


     Cash used in operating activities amounted to $18.4 million in the first
nine months of 2004 in comparison with a cash source of $62.4 million provided
by operating activities in the same period of 2003. Operating cash flow includes
cash inflows from premiums, fees and investment income, and cash outflows for
benefits and expenses paid. In periods of growth of new business our operating
cash flow may decrease due to first year commissions paid on new business
generated. For income recognition purposes these commissions are deferred and
amortized over the life of the business. The decrease in


                                       52

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


operating cash flow is partly attributable to settlement of a tax liability of
approximately $23.0 million. This liability resulted from actions taken by the
former owner of Scottish Re Life Corporation immediately prior to its
acquisition in December 2003. This outflow is not expected to recur. When
adjusted for this payment, cash inflows from operations in the first nine months
of 2004 were $4.6 million compared to inflows $62.4 million in the same period
of 2003. This decrease is due to the timing of receipt of reinsurance
receivables and settlement of reinsurance payables. During the nine month period
ending September 30, 2004 we settled reinsurance payables outstanding at
December 30, 2003. Reinsurance receivables have increased due to the recently
completed negotiation of a contract.

     We believe cash flows from operations will be positive over time. However,
they may be positive or negative in any one period depending on the amount of
new life reinsurance business written, the level of ceding commissions paid in
connection with writing that business, the level of renewal premiums earned in
the period and the timing of receipt of reinsurance receivables and settlement
of reinsurance payables. To address the risk that operating cash flows may not
be sufficient in any given period we maintain a high quality fixed maturity
portfolio with positive liquidity characteristics. These securities are
available for sale and can be sold to meet obligations if necessary.

Capital and collateral

     At September 30, 2004, total capitalization was $1.1 billion compared to
$964.3 million at December 31, 2003. Total capitalization is analyzed as
follows:

<TABLE>
<CAPTION>
                                                    September 30,        December 31,
                                                        2004                 2003
                                                  ----------------    ------------------
                                                          (dollars in thousands)
<S>                                             <C>                  <C>
        Shareholders' equity....................  $       720,878      $       659,844
        Mezzanine equity........................          142,296              141,928
        Long-term debt..........................          194,500              162,500
                                                  ----------------    ------------------
        Total                                     $     1,057,674      $       964,272
                                                  ================    ==================
</TABLE>

     The increase in capitalization is due to the net income for the nine months
ended September 30, 2004 of $50.3 million, the issuance of trust preferred debt
of $32.0 million, the issuance of share capital to employees on the exercise of
options of $7.3 million and an increase in other comprehensive income of $8.6
million offset by dividends paid of $5.3 million. Other comprehensive income
consists of the unrealized appreciation on investments and the cumulative
translation adjustment arising from the translation of Scottish Re Holdings
Limited's balance sheet at exchange rates as of September 30, 2004.

     In February 2004, we filed a registration statement with the Securities and
Exchange Commission utilizing a "shelf" registration process relating to a
number of different types of debt and equity securities. This shelf enables us
to sell from time to time securities described in the registration statement up
to a total of $750.0 million.

     As discussed previously, we expect to raise an additional $230.0 million in
new capital to satisfy the capital requirements of our proposed acquisition of
the individual life business of ING Re. This capital includes $180.0 million to
be provided by The Cypress Group, a private equity firm, and an additional $50.0
million of trust preferred securities.

     During the nine months ended September 30, 2004, we paid dividends totaling
$5.3 million or $0.15 per share. On November 5, 2004, we declared a dividend of
$0.05 per share to be paid on December 2, 2004.


                                       53

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     On June 25, 2004, we closed a structured finance facility with HSBC Bank
USA, N.A. This facility provides $200.0 million that can be used to
collateralize reinsurance obligations under intercompany reinsurance agreements.
Simultaneously, we entered into a total return swap with HSBC Bank USA, N.A.
under which we are entitled to the total return of the investment portfolio of
the trust established in respect of this facility. As a result, the balances and
activities of the trust have been consolidated in these financial statements.

     During 2003, we renewed our credit facilities, which currently consist of:

          a)   a credit facility totaling $50.0 million, of which $25.0 million
               is available on an unsecured basis and $25.0 million is available
               on a secured basis. The facility provides capacity for borrowings
               and letters of credit. The interest rates on amounts borrowed
               under the secured facility is LIBOR plus 50 basis points and
               under the unsecured facility is LIBOR plus 75 basis points. This
               facility was scheduled to expire in October 2004 and was extended
               to December 31, 2004. It is renewable upon the agreement of both
               parties.

           b)  a secured credit facility totaling $50.0 million. This facility
               provides a combination of borrowings and letters of credit.
               Interest rates on amounts borrowed under this facility is LIBOR
               plus 45 basis points. This facility was scheduled to expire in
               September 2004 and was extended to December 1, 2004. It is
               renewable upon the agreement of both parties.

     One of the facilities requires that Scottish Annuity & Life Insurance
Company (Cayman) Ltd. maintains shareholder's equity of at least $340.0 million.
At September 30, 2004, Scottish Annuity & Life Insurance Company (Cayman) Ltd.'s
shareholder's equity was $821.8 million. The other facility requires that we
maintain consolidated net worth of $520.0 million, a maximum debt to total
capitalization ratio of 30% and uncollateralized assets of 1.2 times any
unsecured borrowings. At September 30, 2004, our net worth was $720.9 million
and the ratio of debt to total capitalization was 18.4%. Our failure to comply
with the requirements of the credit facilities would, subject to grace periods,
result in an event of default, and we could be required to repay any outstanding
borrowings. At September 30, 2004, there were no borrowings under the
facilities. Outstanding letters of credit under these facilities amounted to
$33.8 million as at September 30, 2004 and $31.2 million at December 31, 2003.

     We are currently in process of arranging a $150.0 million 364 day unsecured
credit facility, which is expected to be completed by December 31, 2004.

     We must have sufficient assets available for use as collateral to support
borrowings, letters of credit, and certain reinsurance transactions. With these
reinsurance transactions, the need for collateral or letters of credit arises in
five ways:

     o    when Scottish Annuity & Life Insurance Company (Cayman) Ltd., Scottish
          Re (Dublin) Limited or Scottish Re Limited enters into a reinsurance
          treaty with a U.S. customer, we must contribute assets into a reserve
          credit trust with a U.S. bank or issue a letter of credit in order
          that the ceding company may obtain reserve credit for the reinsurance
          transaction;

     o    when Scottish Re (U.S.), Inc. enters into a reinsurance transaction,
          it typically incurs a need for additional statutory capital. This need
          can be met by its own capital surplus, an infusion of cash or assets
          from Scottish Re or an affiliate or by ceding a portion of the
          transaction to another company within the group or an unrelated
          reinsurance company, in


                                       54

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


          which case that reinsurer must provide reserve credit by contributing
          assets in a reserve credit trust or a letter of credit;

     o    Scottish Re (U.S.), Inc. is licensed, accredited, approved or
          authorized to write reinsurance in 50 states including the District of
          Columbia. When Scottish Re (U.S.), Inc. enters into a reinsurance
          transaction with a customer domiciled in a state in which it is not a
          licensed, accredited, authorized or approved reinsurer, it likewise
          must provide a reserve credit trust or letter of credit;

     o    Scottish Re Life Corporation is licensed, accredited, approved or
          authorized to write reinsurance in 50 states, the District of
          Columbia, Guam and the Federated States of Micronesia. When Scottish
          Re Life Corporation enters into a reinsurance transaction with a
          customer domiciled in a state in which it is not a licensed,
          accredited, authorized or approved reinsurer, it likewise must provide
          a reserve credit trust or letter of credit; and

     o    even when Scottish Re (U.S.), Inc. is licensed, accredited, approved
          or authorized to write reinsurance in a state, it may agree with a
          customer to provide a reserve credit trust or letter of credit
          voluntarily to mitigate the counter-party risk from the customer's
          perspective, thereby doing transactions that would be otherwise
          unavailable or would be available only on significantly less
          attractive terms.

     Scottish Annuity & Life Insurance Company (Cayman) Ltd. has agreed with
Scottish Re (U.S.), Inc. that it will (1) cause Scottish Re (U.S.), Inc. to
maintain capital and surplus equal to the greater of $20.0 million or 250% of
Risk Based Capital ("RBC") under the risk-based capital laws of the state of
Delaware and (2) provide Scottish Re (U.S.), Inc. with enough liquidity to meet
its obligations in a timely manner.

     In addition, Scottish Annuity & Life Insurance Company (Cayman) Ltd. and
Scottish Re have agreed with Scottish Re Limited that in the event Scottish Re
Limited is unable to meet its obligations under its insurance or reinsurance
agreements, Scottish Annuity & Life Insurance Company (Cayman) Ltd. (or if
Scottish Annuity & Life Insurance Company (Cayman) Ltd. cannot fulfill such
obligations, then Scottish Re) will assume all of Scottish Re Limited's
obligations under such agreements.

     Scottish Annuity & Life Insurance Company (Cayman) Ltd. intends, subject to
regulatory approval, to enter into an agreement with Scottish Re Life
Corporation stating that it will (1) cause Scottish Re Life Corporation to
maintain capital and surplus equal to the greater of $20.0 million or such
amount necessary to prevent the occurrence of a Company Action Level Event under
the risk-based capital laws of the state of Missouri and (2) provide Scottish Re
Life Corporation with enough liquidity to meet its obligations in a timely
manner.

     Scottish Re Group Limited and Scottish Annuity & Life Insurance Company
(Cayman) Ltd. have executed a similar agreement for Scottish Re (Dublin) Limited
and may, from time to time, execute additional agreements guaranteeing the
performance and/or obligations of their subsidiaries.

     Our business is capital intensive. We expect that our cash and investments,
together with cash generated from our businesses, will be sufficient to meet our
current liquidity and letter of credit needs. However, if our business continues
to grow significantly, we will need to raise additional capital.


                                       55

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


Off balance sheet arrangements

     We have no obligations, assets or liabilities other than those disclosed in
the financial statements; no trading activities involving non-exchange traded
contracts accounted for at fair value; and no relationships and transactions
with persons or entities that derive benefits from their non-independent
relationship with us or our related parties.

Changes in Accounting Standards

     In July 2003, the Accounting Standards Executive Committee issued Statement
of Position 03-01 ("SOP"), "Accounting and Reporting by Insurance Enterprises
for Certain Nontraditional Long-Duration Insurance Contracts and for Separate
Accounts". This SOP provides guidance on accounting and reporting by insurance
enterprises for certain nontraditional long-duration contracts and for separate
accounts and is effective for financial statements for fiscal years beginning
after December 15, 2003. In implementing the SOP we have made various
determinations, such as qualification for separate account treatment,
classification of securities in separate account arrangements, significance of
mortality and morbidity risk, adjustments to contract holder liabilities, and
adjustments to estimated gross profits as defined in SFAS No. 97, "Accounting
and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and
for Realized Gains and Losses from the Sale of Investments". Implementation of
this SOP has not had a material effect on our financial statements.

     Effective December 31, 2003, we adopted the disclosure requirements EITF
03-1. This EITF provides guidance on disclosures for other than temporary
impairments of debt and marketable equity investments that have been accounted
for under SFAS No. 115 "Accounting for Certain Investments in Debt and Equity
Securities". During the quarter ended September 30, 2004, the effective date of
the application of EITF 03-01 for debt securities that are impaired because of
interest rate and/or sector spread increases was delayed pending issuance of
further guidance.

     In January 2003, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation 46, "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51" ("FIN 46"). FIN 46 provides a framework for
identifying variable interest entities and determining when a company should
include its assets, liabilities, non-controlling interests and results of
activities in the consolidated financial statements. A variable interest entity
is a legal structure used to conduct activities or hold assets that either (1)
has an insufficient amount of equity to carry out its principal activities
without additional subordinated financial support, (2) has a group of equity
owners that are unable to make significant decisions about its activities, or
(3) has a group of equity owners that do not have the obligation to absorb
losses or the right to receive returns generated by its operations. FIN 46
requires a variable interest entity to be consolidated if a party with an
ownership, contractual or other financial interest in the variable interest
entity is obligated to absorb a majority of the risk of loss from the variable
interest entity's activities, is entitled to receive a majority of the variable
interest entity's residual returns, or both. A variable interest holder that
consolidates the variable interest entity is called the primary beneficiary. We
are the primary beneficiary of the structured finance facility discussed in note
12 and thus have consolidated the variable interest entity in accordance with
FIN 46.

     During the quarter ended September 30, 2004, EITF 04-8 "The Effect of
Contingently Convertible Debt on Diluted Earnings Per Share" was issued. EITF
04-8 requires that certain instruments with embedded conversion features that
are contingent upon market price triggers be included in diluted earnings per
share calculations regardless of whether the contingency has been met. Our 4.5%
senior convertible notes are convertible on the basis of a market price trigger.
On October 26, 2004 we amended the terms of these notes so that we are required
to settle the principal amount of $115.0 million in cash on


                                       56

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


conversion or repurchase. As a result we shall continue to apply the treasury
stock method in calculating diluted earnings per share for amounts in excess of
the principal of $115.0 million.

Forward-Looking Statements

     Some of the statements contained in this report are not historical facts
and are forward-looking within the meaning of the Private Securities Litigation
Reform Act. Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results to differ
materially from the forward-looking statements. Words such as "anticipates",
"expects", "intends", "plans", "believes", "seeks", "estimates", "may", "will",
"continue", "project", and similar expressions, as well as statements in the
future tense, identify forward-looking statements.

     These forward-looking statements are not guarantees of our future
performance and are subject to risks and uncertainties that could cause actual
results to differ materially from the results contemplated by the
forward-looking statements. These risks and uncertainties include:

     o    uncertainties relating to the ratings accorded to our insurance
          subsidiaries;

     o    the risk that our risk analysis and underwriting may be inadequate;

     o    exposure to mortality experience which differs from our assumptions;

     o    risks arising from our investment strategy, including risks related to
          the market value of our investments, fluctuations in interest rates
          and our need for liquidity;

     o    uncertainties arising from control of our invested assets by third
          parties;

     o    developments in global financial markets that could affect our
          investment portfolio and fee income;

     o    changes in the rate of policyholder withdrawals or recapture of
          reinsurance treaties;

     o    the risk that our retrocessionaires may not honor their obligations to
          us;

     o    terrorist attacks on the United States and the impact of such attacks
          on the economy in general and on our business in particular;

     o    political and economic risks in developing countries;

     o    the impact of acquisitions, including the ability to successfully
          integrate acquired businesses, the competing demands for our capital
          and the risk of undisclosed liabilities;

     o    loss of the services of any of our key employees;

     o    losses due to foreign currency exchange rate fluctuations;

     o    uncertainties relating to government and regulatory policies (such as
          subjecting us to insurance regulation or taxation in additional
          jurisdictions);

     o    the competitive environment in which we operate and associated pricing
          pressures; and


                                       57

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations (continued)


     o    changes in accounting principles.

     The effects of these factors are difficult to predict. New factors emerge
from time to time and we cannot assess the financial impact of any such factor
on the business or the extent to which any factor, or combination of factors,
may cause results to differ materially from those contained in any forward
looking statement. Any forward looking statement speaks only as of the date of
this report and we do not undertake any obligation, other than as may be
required under the Federal securities laws, to update any forward looking
statements to reflect events or circumstances after the date of such statement
or to reflect the occurrence of unanticipated events.


                                       58

<PAGE>


Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Please refer to "Item 7A: Quantitative and Qualitative Disclosures About
Market Risk" in our Annual Report on Form 10-K. That information is hereby
supplemented as follows:

Interest Rate Risk

     Interest rate risk consists of two components: (1) in a falling rate
scenario, we have reinvestment risk, which is the risk that interest rates will
decline and funds reinvested will earn less than is necessary to match
anticipated liabilities; and (2) in a rising rate scenario, we have the risk
that cash outflows will have to be funded by selling assets, which will then be
trading at depreciated values. With some annuity liabilities, these risks are
compounded by variability in liability cash flows arising from adverse
experience in withdrawals, surrenders, mortality, and election of early
retirement.

     We mitigate both components of risk through asset-liability management,
including the technique of simulating future results under a variety of interest
rate scenarios and modifying the investment and hedging strategy to mitigate
downside risk to earnings. Our investment portfolio is composed of
fixed-maturity bond investments, of which the majority are at fixed interest
rates. For fixed-rate investments backing reinsurance liabilities, the maturity
structure has been designed to have approximately the same exposure to changes
in interest rates as the related liabilities. Floating-rate liabilities,
including borrowings, are backed primarily by floating-rate assets. In the
capital account, however, we own investments that are also sensitive to interest
rate changes and this sensitivity is not offset by liabilities. In order to
mitigate the impact of changes in interest rates we have entered into an
interest rate swap in respect of the investments in our capital accounts. Our
overall objective is to limit interest rate exposure.

Item 4. Controls and Procedures

     Evaluation of disclosure controls and procedures. Based on their
evaluation, our principal executive officer and principal financial officer have
concluded that as of the end of the period covered by this report Scottish Re's
disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)
under the Securities and Exchange Act of 1934 (the "Exchange Act")) are
effective to ensure that information required to be disclosed by Scottish Re
Group Limited in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.

     During the fourth quarter of 2004, we determined that our International
segment had incorrectly reported premiums earned, claims and other policy
benefits, acquisition costs and other insurance expenses and the income tax
benefit in the quarters ended June 30, 2004 and September 30, 2004. The effect
of these errors was to understate net income by $1.1 million in the three months
ended June 30, 2004, or $0.03 per diluted ordinary share, to overstate net
income by $1.2 million in the three months ended September 30, 2004, or $0.03
per diluted share, to overstate net income by $112,000 in the nine month period
ended September 30, 2004 and to overstate shareholder's equity by $112,000 at
September 30, 2004. There is no impact on the previously reported earnings per
diluted ordinary share for the nine months ended September 30, 2004.

     The errors were made in the process of compiling income statement
information on the accrual of premiums and resulted from incorrect references
within the spreadsheets used to calculate these accruals. As a result incorrect
information was referenced by the summary used to prepare the journal entries
used


                                       59

<PAGE>


in updating the general ledger. The errors were detected by management as part
of their ongoing analysis of internal controls over financial reporting for
Sarbanes Oxley Section 404 reporting.

     Our principal executive officers and principal financial officer have
concluded that the errors were the result of a material weakness that existed in
control procedures in compiling information on premium accruals. We have taken a
series of steps in our ongoing process to improve control processes, including
those involving the compilation of information used in reporting premium
accruals, and to avoid similar errors going forward. We have also taken steps to
improve controls around segregation of responsibilities and review of manually
prepared information and have strengthened procedures for the reconciliation of
all material general ledger balances. We are continuing the process of designing
and implementing, new systems and procedures involving our general ledger and
reporting capabilities, which are expected to enhance internal control
processes.

     Changes in internal controls. There have been no changes in internal
control over financial reporting that occurred during the quarter ended
September 30, 2004 that have materially affected, or are reasonably likely to
materially affect, Scottish Re Group Limited's internal control over financial
reporting.


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PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

        The Company is not currently involved in any material litigation or
arbitration.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

        Not applicable.

Item 3. Defaults Upon Senior Securities

        Not applicable.

Item 4. Submission of Matters to a Vote of Securities Holders

        None.

Item 5. Other Information

        Not applicable.



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<PAGE>


Item 6. Exhibits and Reports on Form 8-K

A.   Exhibits

     Except as otherwise indicated, the following Exhibits are filed herewith
and made a part hereof:

     3.1   Memorandum of Association of Scottish Re Group Limited, as amended as
           of December 14, 2001 (incorporated herein by reference to Scottish Re
           Group Limited's Current Report on Form 8-K/A). (6)

     3.2   Articles of Association of Scottish Re Group Limited, as amended as
           of May 2, 2002 (incorporated herein by reference to Scottish Re Group
           Limited's Current Report on Form 8-K filed with the SEC on April 14,
           2003).

     4.1   Specimen Ordinary Share Certificate (incorporated herein by reference
           to Exhibit 4.1 to Scottish Re Group Limited's Registration Statement
           on Form S-1). (1)

     4.2   Form of Amended and Restated Class A Warrant (incorporated herein by
           reference to Exhibit 4.2 to Scottish Re Group Limited's Registration
           Statement on Form S-1). (1)

     4.3   Form of Amended and Restated Class B Warrant (incorporated herein by
           reference to Exhibit 4.3 to Scottish Re Group Limited's Registration
           Statement on Form S-1). (1)

     4.4   Form of Securities Purchase Agreement for the Class A Warrants
           (incorporated herein by reference to Exhibit 4.4 to Scottish Re Group
           Limited's Registration Statement on Form S-1). (1)

     4.5   Form of Warrant Purchase Agreement for the Class B Warrants
           (incorporated herein by reference to Exhibit 4.5 to Scottish Re Group
           Limited's Registration Statement on Form S-1). (1)

     4.6   Form of Securities Purchase Agreement between Scottish Re Group
           Limited and the Shareholder Investors (incorporated herein by
           reference to Exhibit 4.10 to Scottish Re Group Limited's Registration
           Statement on Form S-1). (1)

     4.7   Form of Securities Purchase Agreement between Scottish Re Group
           Limited and the Non-Shareholder Investors (incorporated herein by
           reference to Exhibit 4.12 to Scottish Re Group Limited's Registration
           Statement on Form S-1). (1)

     4.8   Purchase Contract Agreement, dated December 17, 2003, by and among
           the Scottish Re Group Limited and JPMorgan Chase Bank, as purchase
           contract agent and collateral agent (incorporated herein by reference
           to Scottish Re Group Limited's Current Report on form 8-K). (10)

     4.9   Pledge Agreement, dated as of December 17, 2003, by and among the
           Scottish Re Group Limited and JPMorgan Chase Bank, as collateral
           agent and custodial Agent, purchase contract agent, and securities
           intermediary (incorporated herein by reference to Scottish Re Group
           Limited's Current Report on form 8-K). (10)


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<PAGE>


     4.10  Remarketing Agreement, dated as of December 17, 2003, by and among
           the Scottish Re Group Limited and Bear, Stearns & Co. Inc. as
           remarketing agent (incorporated herein by reference to Scottish Re
           Group Limited's Current Report on form 8-K). (10)

     4.11  Certificate of Designations of Convertible Preferred Shares of the
           Scottish Re Group Limited (incorporated herein by reference to
           Scottish Re Group Limited's Current Report on form 8-K). (10)

     10.1  Employment Agreement dated June 18, 1998 between Scottish Re Group
           Limited and Michael C. French (incorporated herein by reference to
           Exhibit 10.1 to Scottish Re Group Limited's Registration Statement
           on Form S-1). (1)(16)

     10.2  Second Amended and Restated 1998 Stock Option Plan effective October
           22, 1998 (incorporated herein by reference to Exhibit 10.3 to
           Scottish Re Group Limited's Registration Statement on Form S-1).
           (1)(16)

     10.3  Form of Stock Option Agreement in connection with 1998 Stock Option
           Plan (incorporated herein by reference to Exhibit 10.4 to Scottish Re
           Group Limited's Registration Statement on Form S-1). (1)(16)

     10.4  Investment Management Agreement dated October 22, 1998 between
           Scottish Re Group Limited and General Re-New England Asset
           Management, Inc. (incorporated herein by reference to Exhibit 10.14
           to Scottish Re Group Limited's Registration Statement on Form S-1).
           (1)

     10.5  Form of Omnibus Registration Rights Agreement (incorporated herein by
           reference to Exhibit 10.17 to Scottish Re Group Limited's
           Registration Statement on Form S-1). (1)

     10.6  1999 Stock Option Plan (incorporated herein by reference to Exhibit
           10.14 to Scottish Re Group Limited's 1999 Annual Report on Form
           10-K). (2)(16)

     10.7  Form of Stock Options Agreement in connection with 1999 Stock Option
           Plan (incorporated herein by reference to Exhibit 10.15 to Scottish
           Re Group Limited s 1999 Annual Report on Form 10-K). (2)(16)

     10.8  Employment Agreement dated September 18, 2000 between Scottish Re
           (U.S.), Inc. and Oscar R. Scofield (incorporated herein by reference
           to Exhibit 10.16 to Scottish Re Group Limited's 2000 Annual Report on
           Form 10-K). (3)(16)

     10.9  Share Purchase Agreement by and between Scottish Re Group Limited and
           Pacific Life dated August 6, 2001 (incorporated by reference to
           Scottish Re Group Limited's Current Report on Form 8-K). (7)

     10.10 Amendment No. 1, dated November 8, 2001, to Share Purchase Agreement
           dated August 6, 2001 by and between Scottish Re Group Limited and
           Pacific Life (incorporated by reference to the Company's Current
           Report on Form 8-K). (5)

     10.11 2001 Stock Option Plan (incorporated herein by reference to Exhibit
           10.17 to Scottish Re Group Limited's 2001 Annual Report on Form
           10-K). (4)(16)


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<PAGE>


     10.12 Form of Nonqualified Stock Option Agreement in connection with 2001
           Stock Option Plan (incorporated herein by reference to Exhibit 10.17
           to Scottish Re Group Limited's 2001 Annual Report on Form 10-K).
           (4)(16)

     10.13 Service Agreement dated December 31, 2001 between Scottish Re
           Holdings Limited and Paul Andrew Bispham (incorporated herein by
           reference to Scottish Re Group Limited's 2001 Annual Report on Form
           10-K). (4)(16)

     10.14 Registration Rights Agreement dated December 31, 2001 between
           Scottish Re Group Limited and Pacific Life (incorporated by reference
           to Scottish Re Group Limited's Current Report on Form 8-K). (5)

     10.15 Stockholder Agreement dated December 31, 2001 between Scottish Re
           Group Limited and Pacific Life (incorporated by reference to Scottish
           Re Group Limited's Current Report on Form 8-K). (5)

     10.16 Tax Deed of Covenant dated December 31, 2001 between Scottish Re
           Group Limited and Pacific Life (incorporated by reference to Scottish
           Re Group Limited's Current Report on Form 8-K). (5)

     10.17 Letter Agreement dated December 28, 2001 between Scottish Re Group
           Limited and Pacific Life (incorporated by reference to Scottish Re
           Group Limited's Current Report on Form 8-K). (5)

     10.18 Form of Indemnification Agreement between Scottish Re Group Limited
           and each of its directors and officers (incorporated by reference to
           Scottish Re Group Limited's Amended Quarterly Report on Form 10-Q/A
           for the period ended September 30, 2002). (8)(16)

     10.19 Employment Agreement dated July 1, 2002 between Scottish Annuity &
           Life Insurance Company (Cayman) Ltd. and Thomas A. McAvity, Jr.
           (incorporated by reference to Scottish Re Group Limited's Amended
           Quarterly Report on Form 10-Q/A for the period ended September 30,
           2002). (8)(16)

     10.20 Employment Agreement dated June 1, 2002 between Scottish Re Group
           Limited and Paul Goldean (incorporated herein by reference to
           Scottish Re Group Limited's Quarterly Report on Form 10-Q for the
           period ended March 31, 2004). (14)(16)

     10.21 Employment Agreement dated July 1, 2002 between Scottish Re Group
           Limited and Elizabeth Murphy (incorporated by reference to Scottish
           Re Group Limited's Amended Quarterly Report on Form 10-Q/A for the
           period ended September 30, 2002). (8)(16)

     10.22 Employment Agreement dated June 1, 2002 between Scottish Re Group
           Limited and Clifford J. Wagner (incorporated by reference to Scottish
           Re Group Limited's Amended Quarterly Report on Form 10-Q/A for the
           period ended September 30, 2002). (8)(16)

     10.23 Employment Agreement dated July 8, 2002 between Scottish Re Group
           Limited and Scott E. Willkomm (incorporated by reference to Scottish
           Re Group Limited's Amended Quarterly Report on Form 10-Q/A for the
           period ended September 30, 2002). (8)(16)


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<PAGE>


     10.24 Employment Agreement dated February 10, 2003 between Scottish Re
           Group Limited and Michael C. French (incorporated herein by reference
           to Scottish Re Group Limited's 2002 Annual Report on Form 10-K).
           (12)(1)

     10.25 Employment Agreement dated February 10, 2003 between Scottish Re
           (U.S), Inc. and Oscar R. Scofield (incorporated herein by reference
           to Scottish Re Group Limited's 2002 Annual Report on Form 10-K).
           (12)(16)

     10.26 Amended Employment Agreement dated February 10, 2003 between Scottish
           Re Group Limited and Thomas A. McAvity (incorporated herein by
           reference to Scottish Re Group Limited's 2002 Annual Report on Form
           10-K). (12)(16)

     10.27 Indenture, dated November 22, 2002, between Scottish Re Group Limited
           and The Bank of New York (incorporated herein by reference to
           Scottish Re Group Limited's Registration Statement on Form S-3). (9)

     10.28 Registration Rights Agreement, dated November 22, 2002, between
           Scottish Re Group Limited and Bear Stearns & Co. and Putnam Lovell
           Securities Inc. (incorporated herein by reference to Scottish Re
           Group Limited's Registration Statement on Form S-3). (9)

     10.29 Employment Agreement dated May 1, 2003 between Scottish Re Holdings
           Limited and David Huntley (incorporated herein by reference to
           Scottish Re Group Limited's Quarterly Report on Form 10-Q for the
           period ended September 30, 2003). (13)(16)

     10.30 Stock Purchase Agreement, dated as of October 24, 2003, by and among
           Scottish Re Group Limited, Scottish Holdings, Inc. and Employers
           Reinsurance Corporation (incorporated herein by reference to Scottish
           Re Group Limited's Current Report on form 8-K). (11)

     10.31 Tax Matters Agreement, dated as of January 22, 2003, by and among
           Scottish Re Group Limited, Scottish Holdings, Inc. and Employers
           Reinsurance Corporation (incorporated herein by reference to the
           Scottish Re Group Limited's Current Report on form 8-K). (11)

     10.32 Transition Services Agreement, dated as of January 22, 2003, by and
           among Scottish Holdings, Inc. and Employers Reinsurance Corporation
           (incorporated herein by reference to the Scottish Re Group Limited's
           Current Report on form 8-K). (11)

     10.33 Employment Agreement dated April 21, 2004, by and among Scottish
           Holdings, Inc. and Seth W. Vance (incorporated herein by reference to
           Scottish Re Group Limited's Quarterly Report on Form 10-Q for the
           period ended March 31, 2004). (14)(16)

     10.34 Amendment to Employment Agreement dated March 29, 2004, by and
           between Scottish Re (U.S.), Inc. and Oscar R. Scofield (incorporated
           herein by reference to Scottish Re Group Limited's Quarterly Report
           on Form 10-Q for the period ended June 30, 2004, filed with the SEC
           on August 9, 2004). (16)

     10.35 Asset Purchase Agreement, dated as of October 17, 2004, by and among
           Security Life of Denver Insurance Company, Security Life of Denver
           International Limited, ING America Insurance Holdings, Inc. (for
           purposes of Section 11.11), Scottish Re Group Limited, Scottish Re
           (U.S.), Inc., Scottish Annuity & Life Insurance Company (Cayman) Ltd.
           (for purposes of Section 5.26) and Scottish Re Life Corporation (for
           purposes of Section 5.24) (incorporated herein by reference to
           Scottish Re Group Limited's Current Report on Form 8-K). (15)


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<PAGE>


     10.36 Securities Purchase Agreement, dated as of October 17, 2004, by and
           among Scottish Re Group Limited and Cypress Merchant B Partners II
           (Cayman) L.P., Cypress Merchant Banking II-A C.V., 55th Street
           Partners II (Cayman) L.P. and Cypress Side-by-Side (Cayman) L.P.
           (including form of Subordinated Note, Class C Warrant, Shareholders'
           Agreement and Amendments to Articles of Association) (incorporated
           herein by reference to Scottish Re Group Limited's Current Report on
           Form 8-K). (15)

     10.37 Form of Voting Agreement, by and among Cypress Merchant B Partners II
           (Cayman) L.P., Cypress Merchant Banking II-A C.V., 55th Street
           Partners II (Cayman) L.P. and Cypress Side-by-Side (Cayman) L.P.,
           Scottish Re Group Limited and, respectively, each director and each
           officer of Scottish Re Group Limited (incorporated herein by
           reference to Scottish Re Group Limited's Current Report on Form 8-K).
           (15)

     10.38 Voting Agreement, dated as of October 15, 2004, by and among Scottish
           Re Group Limited, Cypress Merchant B Partners II (Cayman) L.P.,
           Cypress Merchant Banking II-A C.V., 55th Street Partners II (Cayman)
           L.P. and Cypress Side-by-Side (Cayman) L.P. and Pacific Life
           Insurance Company (incorporated herein by reference to Scottish Re
           Group Limited's Current Report on Form 8-K). (15)

     10.39 Letter Agreement, dated as of October 17, 2004, by and among Scottish
           Re Group Limited and Cypress Merchant B Partners II (Cayman) L.P.,
           Cypress Merchant Banking II-A C.V., 55th Street Partners II (Cayman)
           L.P. and Cypress Side-by-Side (Cayman) L.P. (incorporated herein by
           reference to Scottish Re Group Limited's Current Report on Form 8-K).
           (15)

     10.40 First Supplemental Indenture, dated as of October 26, 2004, between
           Scottish Re Group Limited and The Bank of New York (incorporated
           herein by reference to Scottish Re Group Limited's Current Report on
           form 8-K, filed with the SEC on October 29, 2004).

     10.41 Amendment to Employment Agreement, dated as of March 29, 2004, by and
           among the Company and Michael C. French (incorporated herein by
           reference to Scottish Re Group Limited's Quarterly Report on Form
           10-Q for the nine month period ended September 30, 2004, filed with
           the SEC on November 8, 2004). (16)

     10.42 Employment Agreement, dated as of March 29, 2004, by and among the
           Company and Deborah G. Percy (incorporated herein by reference to
           Scottish Re Group Limited's Quarterly Report on Form 10-Q for the
           nine month period ended September 30, 2004, filed with the SEC on
           November 8, 2004). (16)

     31.1  Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
           2002

     31.2  Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
           2002

     32.1  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
           to Section 906 of the Sarbanes-Oxley Act of 2002.

     32.2  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
           to Section 906 of the Sarbanes-Oxley Act of 2002.

    ____________________


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<PAGE>

     (1)  Scottish Re Group Limited's Registration Statement on Form S-1 was
          filed with the SEC on June 19, 1998, as amended.

     (2)  Scottish Re Group Limited's 1999 Annual Report on Form 10-K was filed
          with the SEC on April 3, 2000.

     (3)  Scottish Re Group Limited's 2000 Annual Report on Form 10-K was filed
          with the SEC on March 30, 2001.

     (4)  Scottish Re Group Limited's 2001 Annual Report on Form 10-K was filed
          with the SEC on March 5, 2002.

     (5)  Scottish Re Group Limited's Current Report on Form 8-K was filed with
          the SEC on December 31, 2001.

     (6)  Scottish Re Group Limited's Current Report on Form 8-K/A was filed
          with the SEC on January 11, 2002.

     (7)  Scottish Re Group Limited's Current Report on Form 8-K was filed with
          the SEC on August 9, 2001.

     (8)  Scottish Re Group Limited's Amended Quarterly Report on Form 10-Q/A
          was filed with the SEC on August 8, 2002.

     (9)  Scottish Re Group Limited's Registration Statement on Form S-3 was
          filed with the SEC on January 31, 2003, as amended.

     (10) Scottish Re Group Limited's Current Report on Form 8-K was filed with
          the SEC on December 17, 2003.

     (11) Scottish Re Group Limited's Current Report on Form 8-K was filed with
          the SEC on January 6, 2004.

     (12) Scottish Re Group Limited's 2002 Annual Report on Form 10-K was filed
          with the SEC on March 31, 2003.

     (13) Scottish Re Group Limited's Quarterly Report on Form 10-Q was filed
          with the SEC on August 12, 2003.

     (14) Scottish Re Group Limited's Quarterly Report on Form 10-Q was filed
          with the SEC on May 10, 2004.

     (15) Scottish Re Group Limited's Current Report on Form 8-K was filed with
          the SEC on October 21, 2004.

     (16) This exhibit is a management contract or compensatory plan or
          arrangement.


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<PAGE>


B. Reports on Form 8-K

The following reports on Form 8-K were filed during the three month period
ending September 30, 2004:

     Scottish Re Group Limited filed a report on Form 8-K on August 9, 2004 to
report under Items 7 (Financial Statements, Pro Forma Financial Information and
Exhibits) and 12 (Results of Operations and Financial Condition) Scottish Re
Group Limited's financial results for the six month period ended June 30, 2004.


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<PAGE>


                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                SCOTTISH RE GROUP LIMITED

Date: January 31, 2005          By: /s/ Scott E. Willkomm
                                    ---------------------
                                    Scott E. Willkomm
                                    Chief Executive Officer and President

Date: January 31, 2005          By: /s/ Elizabeth A. Murphy
                                    -----------------------
                                    Elizabeth A. Murphy
                                    Chief Financial Officer



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